The first reading of Q1 GDP came in much weaker than expected — 0.2% QoQ SAAR versus 1.0% expected from Wall Street economists and 3.0% in Q4.  At left, we present our table of GDP’s major components.  One key insight the table offers is that consumption fell, but did so largely because of extremely weak imports; goods consumption contribution to GDP fell by 1.0% as Americans consumed fewer goods from abroad, despite the strong dollar.  Strong dollar is definitely hitting the industrial economy though; export declines shaved 1.55 ppt off of growth, while investment continues to suffer from the oil patch decline, with 86 bps of the 1.04 ppt drag on GDP in nonresidential fixed investment coming from industrial equipment and structures.  Housing continues to be a meek contributor, and disappointingly, local governments cut investment in the quarter.

We’ll have more analysis tonight (including why quarter-over-quarter analysis for Q1 should only be one part of a larger analysis) in The CloserBespoke’s end of day wrap up.  Sign up for a free trial of Bespoke Institutional today to gain access!

In terms of market reaction, we highlighted some rate and currency market moves over on Twitter, and US stocks are currently 0.5% lower on the day. But the Fed Funds futures market has not moved significantly, suggesting that the market does not think the FOMC will be incrementally more dovish thanks to this report.  As shown in our Countdown to Liftoff indicator below, the market is currently pricing in the first Fed rate hike in January 2016.  The committee releases its policy decision for April later today, with no change expected in interest rates.

042915 countdown to liftoff

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