Tags: atlanta | fed | gdp | economic | growth

Atlanta Fed Slashes Economic-Growth Estimate to 3.8 Percent

Atlanta Fed Slashes Economic-Growth Estimate to 3.8 Percent
(Andrey Popov/Dreamstime)

Friday, 06 July 2018 12:24 PM

The U.S. economy is growing at a 3.8 percent annualized rate in the second quarter, the Atlanta Federal Reserve’s GDPNow forecast model showed Friday, amid estimates of slower consumer-spending growth and private-domestic investment growth

The latest estimate on gross domestic product growth was slower than the 4.1 percent pace estimated on July 2, which was more than double the 2.0 percent pace logged in the first quarter.

“Since the last GDPNow update on Monday, July 2, the nowcasts of second-quarter real consumer spending growth and second-quarter real gross private domestic investment growth have declined from 2.9 percent and 7.1 percent, respectively, to 2.7 percent and 6.0 percent, respectively,” the Atlanta Fed said.

“These declines more than offset an increase in the nowcast of the contribution of net exports to second-quarter real GDP growth from 0.62 percentage points to 0.70 percentage points after this morning's international trade release from the U.S. Census Bureau and the U.S. Bureau of Economic Analysis.”

The next GDPNow update is Wednesday, July 11.

By comparision, the New York Fed forecasts have been running much lower than Atlanta.

The New York Fed Staff Nowcast on Friday stood at 2.8% for the second quarter and 2.7% for the third quarter.

Positive surprises from the ISM manufacturing survey accounted for the increase.

The Atlanta Fed downgrade came just after the government said that U.S. job growth increased more than expected in June as manufacturers stepped up hiring, Reuters explained.

However, steady wage gains pointed to moderate inflation pressures that should keep the Federal Reserve on a path of gradual interest rate increases.

Nonfarm payrolls rose by 213,000 jobs last month, the Labor Department said on Friday. Data for April and May was revised to show 37,000 more jobs created than previously reported. The economy needs to create roughly 120,000 jobs per month to keep up with growth in the working-age population.

The unemployment rate rose to 4.0 percent from an 18-year low of 3.8 percent in June as more people entered the labor force in a sign of confidence in the jobs market. That was the first increase in the jobless rate in 10 months.

The employment report together with data from the Commerce Department showing the trade deficit narrowed 6.6 percent to a 1-1/2-year low of $43.1 billion in May reinforced expectations of robust economic growth in the second quarter.

But the Trump administration’s “America First” trade policy, which has tipped the United States into a trade war with China poses a risk to the labor market and economy.

President Donald Trump has imposed tariffs on a range of imported goods, including steel and aluminum, to protect domestic industries from what he says is unfair competition from foreign manufacturers.

Major trade partners, including China, Canada, Mexico and the European Union, have retaliated with their own tariffs. The U.S. and China slapped tit-for-tat duties on $34 billion worth of the other’s imports on Friday.

Economists have warned the tit-for-tat import tariffs could disrupt the supply chain, undermine business investment and raise prices for consumers, and wipe out the stimulus from a $1.5 trillion tax cut package that came into effect in January.

(Newsmax wire services contributed to this report).

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Economy
The U.S. economy is growing at a 3.8 percent annualized rate in the second quarter, the Atlanta Federal Reserve’s GDPNow forecast model showed Friday, amid estimates of slower consumer-spending growth and private-domestic investment growth
atlanta, fed, gdp, economic, growth
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2018-24-06
Friday, 06 July 2018 12:24 PM
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