Intermoney| As expected, imports subtracted from GDP, which was expected given the trade deficit. The trade drag took 0.86 p.p. off the growth rate. Paradoxically, strong imports reflect solid consumer demand, but they also detract from overall GDP growth. That is the trade-off.
Net exports only grew by +0.9% quarter-on-quarter, which shows that a strong dollar seems to put some pressure on exports. Also note that inventories built up at a slower pace last quarter, which had the effect of reducing GDP by 0.35 p.p. Then, leaving aside the slower rise in inventories and the volatile impact of trade, GDP would have expanded by 2.81%, which shows a stronger performance than one would expect at first sight.
Looking at the rest of the items, consumption remained at 2.5%, moderating from 4Q23 (3.3%) but within logic. The first months of the year with cold temperatures have had an impact. This, together with the fact that the Fed has not ceased to set interest rates in the 4.25%-4.5% range, justified the fact that consumption of goods fell by -0.4% quarter-on-quarter (vs. 3.0% quarter-on-quarter before). We are mainly talking about durable goods, whose contraction was 1.2% and explained a good part of the bad overall goods data.
The poorer performance of auto sales and components, as well as gasoline and other energy goods were the downward drivers. But where we really saw the fundamentals highlighting the strength of activity and domestic demand was in the consumption of services, which advanced at 4.0%, accelerating by six tenths of a percentage point from the previous reading. Within services, both medical services (up 0.59 p.p.) and financial services and insurance (up 0.37 p.p.) were pushing upwards, which on the other hand we could take into account given the revision of many contracts and tariffs.
