FXStreet (Łódź) - Rob Carnell from ING suggests that the Q2 US GDP reading due out on Wednesday should come in at 4.6%, which is a much more optimistic view than market consensus of a 3% rise.

Key quotes

“The consensus record for forecasting US GDP is not great. The consensus for the third release of GDP was -1.8% – more than a percent different than the actual figure.”

“Given that the first quarter was hit hard by a number of features that were reversible one-offs – bad weather and impact of Obamacare on health spending – there should be some strong bounce-backs.”

“One of the biggest drags in 1Q14 was from inventories (-1.6ppt). This is one of the hardest components of GDP to accurately forecast. But one of the ones we rely on, which uses ISM inventory data, suggests that we should anticipate a strong rebuild of the inventories that were drawn down in 1Q14.”

“Spending by the government looks to be bouncing back strongly too, thanks to some pent-up spending on structures (roads, bridges, etc) following the 1Q14 hiatus.”

“Nonetheless, despite recovering from 1Q14, consumer spending will struggle to do muchbetter than about 1.5% in 2Q14.”

“Business investment remains a fairly weak component. It is not all that clear why, given the continuation of the recovery, and neutral credit environment. We had hoped it would have already picked up by now, but it hasn’t really.“

“Residential investment has been fairly dismal. But then it was in 1Q14 too. It probably won’t be as bad as in 2Q14, but don’t expect much boost from this sector.”

“Net exports – although the winter weather in 1Q14 most likely hit exports hard, the rebuild of inventories is likely to suck in imports – net exports, although positively contributing to GDP, probably won’t do so by much.”

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