US: Growth with only three of six cylinders working – Wells Fargo

Research Team at Wells Fargo Securities suggests that the real final sales, led by consumer spending, residential investment and government spending, continue to drive US growth.

Key Quotes

“The weak first quarter performance gives way to a more trend-like 2 percent plus pace for the rest of this year. Meanwhile, inflation continues to inch upward. This combination of better growth and continued moderate inflation provides the Fed a basis for raising the fed funds rate but without any sense of urgency.

Given the modest inflation pace and global uncertainties, the yield curve remains relatively flat. Finally, modest nominal GDP growth, in the face of rising unit labor costs, has resulted in a negative path for profits.”