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Atlanta Fed See 4Q Economic Growth Slowing to 1 Percent

Atlanta Fed See 4Q Economic Growth Slowing to 1 Percent

By    |   Tuesday, 05 November 2019 03:49 PM

The U.S. economy is likely growing at a 1% annualized rate in the fourth quarter, the Atlanta Federal Reserve’s GDPNow forecast model showed Tuesday.

This was slower than the 1.1% pace estimated by the Atlanta Fed’s GDP program on Friday.

The latest revision is down from the already low 1.5% the tracker forecast a couple of weeks back. The Wall Street consensus estimate remains at about 1.8%.

"Following data releases by the U.S. Bureau of Economic Analysis, the U.S. Census Bureau, and the Institute for Supply Management, the nowcasts of fourth-quarter real personal consumption expenditures growth and fourth-quarter real gross private domestic investment growth decreased from 2.2 percent and -2.5 percent, respectively, to 2.1 percent and -2.7 percent, respectively," the Atlanta Fed said.

Data on Tuesday showed the reading on the ISM services index improved to 54.7 in October from 52.6 in September, above expectations of 53.4, according to economists polled by Reuters, easing concerns that a slowdown in the manufacturing sector was spreading to other parts of the economy, Reuters said.

The government last week said gross domestic product increased at a 1.9% annualized rate in the third quarter, also as businesses maintained a steady pace of inventory accumulation, exports rose and the housing market rebounded after contracting for six straight quarters, the government said in its advance estimate of GDP, Reuters said.

The economy grew at a 2.0% pace in the April-June period. Economists polled by Reuters had forecast GDP increasing at a 1.6% rate in the July-September quarter. Third-quarter growth marked a further slowdown from the brisk 3.1% rate notched in the first three months of the year. Still, the economy is expanding at its potential, estimated between 1.7% and 2.0%.

To be sure, conflicting signals make it difficult to get a handle on the true health of the U.S. economy and reducing uncertainty for businesses would provide a shot in the arm to growth, Richmond Fed Reserve Bank President Thomas Barkin said on Tuesday.

“The strength of consumption and the labor market might be saying ‘hold’ or even ‘raise rates,’ while the softness of investment, inflation and the bond market might be saying ‘lower rates,’” Barkin said in prepared remarks to an economic outlook conference in Baltimore.

The U.S. central bank last week cut interest rates for the third time this year but made plain that it does not expect to lower borrowing costs further unless the U.S. economic outlook materially deteriorates, Reuters reported. The overnight benchmark lending rate is currently in a target range of between 1.50% and 1.75%.

Fed Chair Jerome Powell had characterized the cuts as insurance against ongoing risks from slowing global growth and the impact of the 16-month U.S.-China trade war.

The next GDPNow update is Friday, November 8.

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The U.S. economy is likely growing at a 1% annualized rate in the fourth quarter, the Atlanta Federal Reserve’s GDPNow forecast model showed Tuesday.
atlanta, fed, gdp, economic, growth
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2019-49-05
Tuesday, 05 November 2019 03:49 PM
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