GDP grew only 2.2% in Q1 vs expectations of 2.5% and hopes for 3.0%. The deflator rose just 1.5% vs the forecast of 2.1% which means that NOMINAL GDP rose only 3.7% vs the estimate of 4.6% and below Q4 of 3.9%. Personal Consumption was better than expected, rising 2.9% but spending on equipment and software rose just 1.7%, a likely hangover from the large gains in the quarters prior as companies took advantage of the depreciation tax credit. Residential construction snapped back by 19.1%, likely helped by the mild winter. Trade didn’t add anything to GDP. Government consumption fell by 3.0% led by an 8.1% drop in defense spending and was the main drag on GDP, taking .8 of a % pt out. Inventories added .6 of % pt to GDP. Real final sales, taking out the inventory influence, rose 1.6% after a 1.1% rise in Q4. The PCE deflator rose 2.4% and the core rose 2.1%. Bottom line, a 2.2% REAL GDP print is disappointing, especially in light of the mild winter and the nominal GDP gain of just 3.7% is the weakest since Q2 ’11. While a reduction in government spending was a factor in the miss, real final sales is still mediocre. From a market and Fed perspective, growth like this just adds to the ‘do more’ calls from many to the Fed but it’s exactly numbers like this that point to ‘do nothing’ because what the Fed is doing clearly isn’t working.