Tags: atlanta | fed | gdp | growth

Atlanta Fed Slashes GDP Estimate to 2.4% From 2.7%

Atlanta Fed Slashes GDP Estimate to 2.4% From 2.7%
(Andrii Yalanskyi/Dreamstime)

Friday, 14 February 2020 03:28 PM

The U.S. economy is likely growing at a 2.4% annualized rate in the first quarter, based on the latest economic data, the Atlanta Federal Reserve’s GDPNow forecast model showed on Friday.

That compared to a 2.7% pace estimated by the Atlanta Fed’s GDP program late last week.

Meanwhile, the New York Fed is less optimistic. The New York Fed Staff Nowcast stands at 1.4% for the first quarter.

"News from this week’s data decreased the nowcast for 2020:Q1 by 0.3 percentage point. Negative surprises from capacity utilization and industrial production data drove most of the decrease," the New York Fed said.

In the wake of Friday's economic reports, growth estimates for the January-March quarter ranged from as low as a 1.0% rate to as high as a 2.4% pace. The economy grew at a 2.1% rate in the fourth quarter, lifted by an improvement in the trade balance as imports declined sharply.

The Fed revisions came hours after the government said U.S. consumer spending slowed further in January, with sales at clothing stores declining by the most since 2009, a trend that could raise concerns about the economy's ability to continue expanding at a moderate pace.

The economy's outlook was also dimmed by other data on Friday showing industrial production decreased for a second straight month in January as unseasonably mild weather depressed demand for utilities, and Boeing suspended production of it troubled 737 MAX plane, Reuters said.

The downgrades followed on the heels of Federal Reserve Chair Jerome Powell's remarks to lawmakers this week that the "economy is in a very good place, performing well." The U.S. central bank last month left interest rates steady and is widely expected to keep monetary policy on hold this year after it reduced borrowing costs three times in 2019.

"The soft patch for consumer spending entered its sixth month in January," said Michael Feroli, an economist at JPMorgan in New York. "With business investment spending still missing in action the economy will need a more buoyant consumer to register above-trend growth."

Retail sales excluding automobiles, gasoline, building materials and food services were unchanged last month. Data for December was revised down to show the so-called core retail sales rising 0.2% instead of jumping 0.5% as previously reported. Core retail sales correspond most closely with the consumer spending component of gross domestic product.

Consumer spending accounts for more than two-thirds of U.S. economic activity. Economists polled by Reuters had forecast core retail sales rising 0.3% last month.

The unchanged reading in core retail sales suggested a further loss of momentum early in the first quarter after consumer spending grew at a 1.8% annualized rate in the October-December quarter. That was a step-back from the 3.2% pace logged in the third quarter.

The economy grew 2.3% in 2019, slowing from 2.9% in 2018.

The slowdown in consumer spending, together with a deepening downturn in business investment and weak manufacturing cast a shadow on the longest economic expansion on record, now in its 11th year. The economy also facing risks from the deadly coronavirus, which has prompted economists to downgrade their growth estimates for the Chinese economy.

In a separate report on Friday, the Fed said industrial production fell 0.3% in January after decreasing 0.4% in December. Industrial output was pulled down by a 4.0% drop in utilities production. A 7.4% plunge in the production of aerospace and miscellaneous transportation equipment also weighed on industrial output last month.

Material from Reuters has been used in this report.

Related Stories:

© 2020 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
The Atlanta Federal Reserve has slashed its first-quarter growth estimate to 2.7% in the wake of recent economic data.
atlanta, fed, gdp, growth
582
2020-28-14
Friday, 14 February 2020 03:28 PM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved