As I was writing my initial question I saw this post.
I deployed my site and enabled static content compression. But still received the following response.
1st Run

2nd Run

I can obviously see that the response size has decreased. This might be a stupid question, but its just to satisfy my own curiosity. If the content is compressed why would it show up as uncompressed in fiddler?

EDIT:
..and can the content be gzipped on the first request as well?
UPDATE:
I solved my issue by using deflate instead of gzip… go figgure :/ (and by comparing, apples with apples, and not 401 errors.) Thanks for all the comments though. Also i found the answer to the 401 errors i was receiving : Link
The second response has the status code 401. I doubt it contains the actual content of the javascript, rather these 341 bytes are the error response sent from the server.