The US economy expanded by a slim 0.2% in this year’s first quarter vs. the previous three-month period (seasonally adjusted real annual rate), the Bureau of Economic Analysis reports. The incremental gain is well below the consensus forecast (and The Capital Spectator’s median estimate). All of the major components in today’s release suffered, with one key exception: disposable personal income (DPI), which posted sharply higher growth in Q1 vs. last year’s Q4.
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Will the Federal Reserve drop new clues about the timing of the first interest rate hike in today’s policy statement at 2pm Eastern? Conventional wisdom suggests that the central bank will push out the date in the wake of sluggish economic data. “We think the statement’s downbeat growth description will reinforce the sense that a June liftoff remains a very long shot,” JPMorgan Chase economist Michael Feroli advised in a note to clients. Sounds reasonable, but it’s not obvious that Mr. Market’s fully on board with this outlook when we look at Treasury yields and the market’s implied inflation forecast.
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● Fed could give clues on first interest rate hike | USA Today
● US consumer confidence falls to year’s lowest level | LA Times
● Case-Shiller US 20-city home-price index up 0.5% in February | MarketWatch
● Richmond Fed: Mfg. in the central Atlantic region “remained soft in April” | BB
● UK GDP growth falls to slowest pace in three years | Telegraph
● Eurozone March M3 Growth Rises; Loans To Private Sector Recover | RTT

The US services sector in April continues to expand at a brisk pace as manufacturing stumbles. That’s the message in yesterday’s economic updates in context with recent numbers available for this month. The case for anticipating a second-quarter bounce back for the US economy, in other words, remains a bit challenged, based on the available data so far.
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● PMI: Strong US service sector growth maintained in April | Markit
● Dallas Fed Index: Texas manufacturing activity weakens again | DMN
● With economy uncertain, no Fed rate hike is seen before fall | AP
● 2% Inflation Target Is Questioned as Fed Policy Panel Prepares to Meet | NY Times
● UK recovery slows sharply in pre-election blow for Cameron | Reuters
● Greek finance minister Yanis Varoufakis replaced as leader of debt talks | Guardian
● Varoufakis sidelined but Greece still in danger | CNBC
● 3 Tough Choices for ECB on Greece | Bloomberg

Forecasters are in near-universal agreement that the government will report a slowdown in US economic growth in the “advance” GDP report for the first quarter that’s scheduled for release on Wednesday (Apr. 29). The only mystery is the degree of deceleration.
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● US durable goods orders rise in Mar as business investment falls | USA Today
● Soft US Economic Data to Round Out the First Quarter | Wells Fargo
● China stocks led Asian equities to 7-year high on hopes of stimulus | Reuters
● Greece’s Day of Reckoning Inches Closer as Payments Loom | Bloomberg
● What happens if Greece can’t pay its debts? | Guardian
● Rajoy Raises Spain’s 2015 GDP Forecast to 2.9% Ahead of Election | Bloomberg

● Simple Rules: How to Thrive in a Complex World
By Donald Sull and Kathleen M. Eisenhardt
Q&A with co-author via The Wall Street Journal
WSJ: Where, in the business context, might “simple rules” help more than a complicated approach?
Donald Sull: Well, a common decision that people face in organizations is capital allocation. In many organizations, there will be thick procedure books or algorithms–one company I worked with had an algorithm that had almost 100 variables for every project. These are very cumbersome approaches to making decisions and can waste time. Basically, any decision about how to focus resources—either people or money or attention—can benefit from simple rules.
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The outlook for first-quarter US growth has been cut to the bone, according to the current estimate of the Atlanta Fed’s GDPNow data. But if the “wisdom” of the crowd is accurate this time, it’s only a temporary stumble. Most economists continue to expect a robust Q2 snapback. The Wall Street Journal’s survey data sees second-quarter GDP rising at a brisk 3.1% pace after a sharp deceleration in growth for Q1. The early clues on Q2 via April releases, however, offer a mixed batch of numbers. There’s a long way to go for digesting this month’s economic reports, but at the moment the data doesn’t look especially compelling for anticipating a strong kickoff to Q2. That could change, of course, but for the moment we’re off to a mixed start in the messy business of revising expectations for the current quarter.
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● US jobless claims edge up, but trend signals firmer labor market | Reuters
● PMI: US manufacturing output growth slows in April | Markit
● New-home sales in US tumble from 7-year high | MarketWatch
● US consumer confidence fell for 2nd week after close to 8-year high | Bloomberg
● Battle Between Strong Dollar and Cheap Gas: Strong Dollar Is Winning | NY Times
● German Ifo Confidence at 10-Month High as Stimulus Kicks | Bloomberg
● Nasdaq hits a new all-time high | San Jose Mercury News