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Our indicators show that growth is falling relative to trend in the US and Asia and rising in Europe. Should we be worried ? The US weakness is difficult to explain but not problematic. There is some hangover from the weather related slowdown of January and February.
Housing starts are trending up gently having fallen back from extremely rapid growth in Q4, 2013. An inventory correction is also in play, which should be short lived. US growth should pick up from here : employment is growing steadily and household net wealth is almost at its 2006 level. Alongside pent up demand, these factors should ensure strong consumption growth. A stronger dollar and reduced political uncertainty will support an expansion in business investment as well. The main danger in the US is overheating in asset markets as the Fed continues to use extreme monetary policy to drive employment growth.
Source : Grosvenor
