This is what happens when a priced to perfection global economy (and well beyond perfection based on the S&P 500) runs into the utterly and completely unpredictable and unforseeable "harsh winter weather."
First, the IMF just cut (again) its forecast for US GDP, this time from 2.0% to the consensus-estimate 1.7%. The IMF cited the 1Q contraction, which from a +3% original estimate ended up being that, just with a minus sign. It also says second-half growth to accelerate... because it must!
- Some other brilliant points from the IMF:
- IMF staff: U.S. to reach full employment “only by end-2017”
- “The economy is expected to reach full employment only by end-2017 and inflationary pressures are expected to remain muted”
- “If true, policy rates could afford to stay at zero for longer than the mid-2015 date currently foreseen by markets”
- Says job market “reasonably healthy,” wages should rise slowly
Or not at all.
And while IMF just slashed its 2014 forecast, it kept its growth forecast steady at 3%. Tomorrow the IMF releases its entire World Economic Outlook quarterly pamphlet which has been the source of so much amusement around these parts. We can't wait to update it for tomorrow's latest and greatest growth slashing.
And just so the IMF doesn't appear alone as the only idiot who, for the 5th year in a row, issued an optimistic forecast about US growth which is crashing before its eyes, here is the National Retail Federation which also just cut its 2014 retail sales growth outlook from 4.1% to 3.6%.
The National Retail Federation today lowered its retail sales forecast for 2014 because of slow growth recorded during the first half of the year, but said sales are expected to grow significantly faster over the next five months. NRF forecasted in January that retail sales would grow 4.1 percent in 2014 over 2013, but today’s revision lowers the forecast to 3.6 percent.
NRF calculated that sales grew 2.9 percent during the first half of the year and are expected to grow at least 3.9 percent during the second half. The numbers include general retail sales and non-store sales, and exclude automobiles, gasoline stations, and restaurants.
“No retailer was immune to the doldrums witnessed during the first quarter, and as a result, the year’s growth trajectory was impacted,” said NRF President and CEO Matthew Shay. “That said, there is plenty of evidence that the second half of the year will be better for the industry as consumers begin to feel more optimistic about their spending decisions.
“And though we maintain realistic expectations of retail sales growth in 2014, we are optimistic that the chances for a stronger economy still exist,” continued Shay.
“The severe weather and other factors we experienced earlier this year have taken their toll on retail, but most of those problems are behind us,” said NRF Chief Economist Jack Kleinhenz. “A second look at our forecast shifted our expectations slightly, but it’s important to note that the outlook is positive. Sales are growing and we expect them to continue at a moderate pace.”
In this month’s Monthly Economic Review, Kleinhenz noted, “…one of the worst winters in recent memory kept shoppers home during the first quarter, and weak numbers for real estate, inventories and exports continued to hamper the economy through the second quarter. However, employment has grown at its strongest pace since 2005, business and consumer confidence have edged higher, manufacturing activity has expanded and inflation pressures remain tame, improving expectations for the second and third quarters.”
And while we enjoy the "it's the weather's fault" joke as much as the next one, can we please move on: said joke hasn't been funny in about 5 months now.