US Private consumption and residential investment to rebound in Q2

The rebound in growth following the disappointing Q1 outturn to be driven mainly by private consumption and non-energy investment. 

"2.7% growth in Q2 is expected in private consumption, up from 2.1% in Q1. In terms of contribution to growth, private consumption would add 1.8pp, 0.4pp higher than last quarter", says Barclays. 

Incoming data on housing have continued to point to a strong acceleration in residential investment in the quarter, as housing starts, building permits, improvements, and sales activity all moved higher on the quarter. 2% q/q saar growth is expected in Q2, which means residential investment would add 0.4pp to growth. 

"The strength of the incoming data on housing activity and home price appreciation led to higher outlook for housing this year and next. Elsewhere, modest growth is forecasted in equipment investment (4.0%) and intellectual property investment (7.0%), and a further modest decline in structures investment (-5.0%), which reflects the continued adjustment of the energy sector to lower oil prices", added Barclays.