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Growth and investment and inflation

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Spanish and UK GDP revisions are due, but this is not the end of the revision process (by a long way) which perhaps limits enthusiasm for the figures. The contrast in nominal GDP between the two economies is quite instructive – UK nominal growth strength has helped mitigate that country's debt burden.
  • The US offers durable goods and capital goods data. The weakness of capital spending in the context of ample corporate liquidity and low rates has puzzled some economists. It may owe something to do with the fact that capital spending often appears disguised as consumer spending nowadays.
  • We have more Fed speakers on the agenda, with markets in a state of some agitation about the prospect of a June rate increase. We would look for a later tightening than that, but still expect a steady rhythm of Fed action.
  • Oil has moved over fifty dollars a barrel. The economic significance of this price threshold is non-existent, but it lends itself to sensationalism from media headline writers. The rise in oil generally (rather than the price threshold specifically) strips away the disguise that consumer price inflation has been hiding behind.