Goldman Q1 GDP Imminent Downgrade Warning Gets Louder: "Significant Downside Risk To Our Q1 GDP Estimate Of +3.5% "

Tyler Durden's picture

Following last week's deplorable durable goods number, and the subsequent Goldman warning, i.e. "the data increase the sense of downside risk to our Q1 GDP estimate of 3.5%", Hatzius has just stepped it up a notch, adding a key adjective confirming it is just a matter of time now: "The latest real consumption figures - including revisions to earlier months - point to growth for Q1 as a whole of approximately 1.75-2.0% qoq annualized. This compares to our current forecast of +3.0%. The report therefore implies significant downside risk to our Q1 GDP estimate of +3.5% qoq annualized." We give it two weeks.

From Jan Hatzius' instanalysis on Personal Consumption data.

1. Nominal consumer spending increased by 0.7% mom in February, but part of the large increased reflected price gains. Real consumer spending increased by 0.3% mom after an unchanged reading in January. The latest real consumption figures - including revisions to earlier months - point to growth for Q1 as a whole of approximately 1.75-2.0% qoq annualized. This compares to our current forecast of +3.0%. The report therefore implies significant downside risk to our Q1 GDP estimate of +3.5% qoq annualized.

2. Nominal personal increase increased by 0.3% in February, slightly less than expected. However, income growth in January was revised up to +1.2% mom from 1.0% previously. Real disposable income - income adjusted for taxes and price change - fell by 0.1% during the month.

3. The Personal Consumption Expenditures (PCE) price index rose by 0.4% mom or 1.6% yoy, as expected. The core PCE price index rose by 0.2% mom (0.155% unrounded) or 0.9% yoy. The monthly growth rate was moderately below our forecast (+0.20% unrounded), but nevertheless confirms signs of firming in this inflation gauge. Growth in the market-based core PCE - which strips out non-market prices estimated by the Commerce Department - also accelerated to +0.17% mom from 0.12% in January.