Markets positive despite US GDP stumble

<p>Kia ora,</p><p>Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news markets are roaring with positivity today.</p><p>First, <a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20220769.pdf" target="_blank"><strong>US jobless claims</strong></a> came in as expected last week at +203,000 and the total number of people on these benefits remained steady at 1.45 mln, and still an historic low.</p><p>But the <a href="https://www.bea.gov/news/2022/gross-domestic-product-first-quarter-2022-advance-estimate" target="_blank"><strong>Q1 GDP number</strong></a> did not come in as expected, recording a surprising fall from the prior quarter when a rise was expected. But this was mostly due to a record trade deficit, softer inventory growth, and a drop in government spending. Meanwhile, personal consumption and non-residential and residential fixed investment remained strong. This same data showed that the inflation pressure might have eased in the period too, which was also a surprise. But we must note that these are 'advance' results, and there are two more revisions due over coming weeks, so they could change. And in nominal terms, American GDP rose at a +6.9% annual rate in the first quarter to be running at a rate of <a href="https://fred.stlouisfed.org/series/GDP" target="_blank"><strong>US$24.383 tln of economic activity</strong></a> and +10.6% higher than a year ago.</p><p>Markets picked up on the strong consumption data, seeing the other Q1 factors weighing on the overall result as temporary, and have turned bullish. The US dollar is surging.</p><p>Meanwhile, the Kansas City Fed's factory survey <a href="https://www.kansascityfed.org/Manufacturing/documents/8775/Manufacturing-April-2022-Kansas-City-Fed.pdf" target="_blank"><strong>reported</strong></a> a continuing strong expansion, even if it was down from the March boo