It will be tough to swallow such a low first-quarter GDP print, but thankfully we should be quickly reminded of the strength and resiliency of the U.S. economy when the April nonfarm payroll report is released next Friday.

Sam Bullard

Categorized in : Business

The employment report will be a critical element in determining how the third quarter is starting off, extended labor market gains would support further solid consumer spending growth.

As the benefits of fiscal stimulus fade and trade policy uncertainty and slowing global demand remain headwinds to business investment, U.S. GDP growth should moderate.

Given signs of slowing growth and little material progress on the trade war, a rebound in job growth would still leave the Fed on course to cut rates at the July meeting and we expect a 25 basis points cut.

Given the recent improvement in economic activity, we expect more workers to be drawn into the labor force.

The economy remains solid, but we anticipate a slowing in the pace of growth in the medium term as the tailwinds from fiscal stimulus fade and the headwinds of tighter monetary policy take hold.

One is hard-pressed as to not concur that the U.S. economy not only remains on solid footing, but is likely to show an accelerated pace of growth in the second quarter.

June's employment report could provide sufficient evidence to Fed officials that they are still positioned to proceed with their monetary policy normalization plans in the second half of the year.

The slower pace of productivity gains in recent years suggests the economy's potential rate of growth has fallen, thus, even with economic growth of around only 2 percent for the remainder of the year, inflation is likely to rise if corporations aim to maintain margins.

Import prices should continue to exert a drag on domestic inflation in the first half of 2016. The incoming data continues to provide uncertainty over the likelihood of a rate hike in March.

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We don't think it will detract from the possibility that the Fed is considering a September rate hike, only if we saw ominous signs of a deterioration elsewhere in the data.

This provides support that March's weakness was temporary and it underpins expectations that nonfarm hiring will rebound in April and continue to post healthy rates of job growth in the coming months.

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We feel the economy is in a position for the Fed to begin normalizing policy. We think it is on the path to make a rate change in June.

As the labor market moves closer to full employment ... we are likely to see firms increase wages. We have already started to see some of that.