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U.S. markets got a fresh boost thanks mostly to Friday’s preliminary GDP release. How did the actual results turn out and what does it imply for the dollar? Here are some quick takeaways from the report.

1. Slowdown? What slowdown?

Ever since the Q1 advance GDP reading was printed, market participants had been buzzing about the sharp slowdown in economic growth for the period, casting a dark cloud over Fed interest rate hike expectations for the remainder of the year.

However, the preliminary report issued last week showed an upgrade from the initially reported 0.7% expansion to 1.2%, outpacing the consensus at 0.9%. Of course this is still slower than the Q4 2016 growth of 2.1% but at least this assures investors that Uncle Sam isn’t in such a deep rut.

2. Stronger than expected consumer sector

Once again, the U.S. economy appears to have been saved by the consumer sector as the revisions mostly centered on a larger than expected increase in non-residential fixed investment and personal consumption expenditures.

In particular, consumer spending advanced by 0.6% in Q1, twice as much as the initially reported 0.3% uptick. However, it’s also worth noting that this is still its slowest pace of growth in a year and doesn’t even hold a candle to the previous period’s 3.5% jump.

3. Slower business investment

On the flip side, there was a bit of a downgrade to the business investment side of the GDP equation. As it turned out, companies raked in a 7.2% increase in equipment spending, a number of notches lower than the initial estimate at 9.0%.

Inventory growth also proceeded at a much slower pace than initially reported. Businesses increased stockpiles by $4.3 billion worth versus the $10.3 billion pickup incorporated in the flash GDP report. This is also far below the $49.6 billion increase reported in the previous quarter, indicating that businesses merely used up stockpiles instead of ramping up production during the period.

4. Three rate hikes for 2017 still a go?

Judging by the reaction of U.S. markets after the numbers were printed, it looks like traders are predicting stronger odds of a June rate hike and a continuation of the Fed’s tightening timeline until the end of the year.

In the latest FOMC minutes, it has been emphasized that policymakers are holding out for more confirmation that the slowdown in Q1 has been transitory. The upgrade no longer puts the first quarter’s GDP reading at its weakest level in three years but the reading still marks the slowest pace of growth since the start of 2016.

gdp

Also, keep in mind that Q1 figures are historically weak due mostly to seasonal factors. After all, business production and consumer spending are usually on the up and up during the Thanksgiving and Christmas holidays in the last quarter of each year, so there’s always a good chance that the succeeding period’s numbers would pale in comparison.