U.S. Review
From Bad to Worse: A Contraction in Q1 GDP Growth?
· The trade balance data this week, for March, showed that the trade deficit was $40.4 billion, suggesting that all else equal, there will likely be a downward revision to the already-soft 0.1 percent GDP growth in Q1.
· The ISM Non-Manufacturing index indicated that the service side of the economy continued to expand in April with business activity and new orders rising for the month.
· In the wake of the soft Q1 GDP growth, productivity declined 1.7 percent for the quarter, while unit labor costs jumped 4.2 percent.
· However, we maintain our expectations for better growth the rest of 2014.
Global Review
The ECB Stays Put; Mixed Results for Brazil and Chile.
· As expected, the ECB kept its benchmark interest rate unchanged at 0.25 percent during its latest meeting while it continues to gauge the need to move in the future as the economy dictates.
· Meanwhile, Brazilian industrial production was better than expected in March. However, these data points are noisy, as Easter and Carnival impact the readings. At the same time, the Chilean economy slowed down further in March.
Read the full report: Economic Research
Wells Fargo