Q1 GDP Now Just 1.2% According To Atlanta Fed; Rate Hike Imminent

Tyler Durden's picture

Another day, another downgrade to US GDP: after yesterday the Atlanta Fed slashed its Q1 GDPNow estimate from 1.8% to 1.3% - with the forecast as high as 3% at the start of the year, and 2.5% as recently as the end of February - moments ago the Atlanta Fed has once again cut its US growth forecast, and now sees Q1 GDP of just 1.2%, on par with the disappointing 0.9% and 0.8% prints in Q4 2015 and Q1 2016.

The reason, according to the model's author, "the GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 1.2 percent on March 8, down from 1.3 percent on March 7. The forecast of the contribution of inventory investment to first-quarter growth fell from -0.72 percentage points to -0.79 percentage points after this morning's wholesale trade report from the U.S. Census Bureau."

What the above really means is that what started off with a quarter full of optimistic forecasts population the model's fields, as more and more actual data had to be plugged in, the underlying growth rate continued to get dragged lower and lower, until it barely top 1%. This is taking place one week before Janet Yellen is expected to hike the interest rates by another 25 bps.

Incidentally, the Atlanta Fed is now roughly 50% below the Wall Street consensus estimate for Q1 GDP.

Finally, in the most bizarre chart to have emerged in recent weeks, it appears that the Fed's GDP estimate is now closely following the inverse of the March rate hike odd probability. The good news: at 100% rate hike odds, it is unlikely that the Atlanta Fed will cut its GDP estimate further in the foreseeable future.

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NugginFuts's picture

Well, that escalated quickly....

Countdown to QE4(?) in 5.....4......3.......2......

Creative_Destruct's picture

What else is new? The Fed has screwed themselves and us with these idiotic policies and idiotic timing. Gotta raise rates going into a recession so more "ammo" ( at best a 1/10 full monetary clip) is available to head off the inevitable debt crisis and recession/depression, which will possibly be triggered and certainly will be amplified by the rate increase.

Then more QE to further weaken savers and the system and continue the path to collapse will inevitably follow.

"Never underestimate the stupidity of people operating in groups," especially that group of people knowm as the Federal Reserve.


tnorth's picture

fundamentals are for losers

Bam_Man's picture

Given the Huuuge revisions that always occur after the fact, 1.2% GDP growth is in fact, a "rounding error".

And on Friday morning we will find out how many HUNDREDS OF THOUSANDS of "new jobs" were created by 1.2% GDP growth.


NugginFuts's picture

The "Protestors for Hire" movement alone can probably account for at least 300k jobs added.

Lady Jessica's picture

Let's keep things in perspective.  The significance of the March rate hike lies not in its magnitude (the mountain of debt accrued since the last hiking cycle notwithstanding).  It's because it signals real intent to commit to a hiking cycle.  These cycles usually comprise a cluster of rate hikes with a fairly consistent gradient/trajectory (almost as if the Fed itself weren't completely in control of the process ;-)).

Remember folks, rates are still going to be unbelievably historically low.

Bam_Man's picture

It seems to me that they are in a REAL hurry - if not PANIC - to get rates comfortably off the Zero Bound before the economy tips into recession and they are forced to cut again.

That is the only way to explain what they are doing, given the extremely weak economic fundamentals. They know that they are running out of time.

BigFatUglyBubble's picture

"It's all a big joke." - The Comedian


gatorengineer's picture

Lets blow the wheels and axles off this motherfucker as we go over the cliff......

Hiking into a 1.2 percent GDP, and trump isnt calling them out?

Loosing faith in my orange jesus....


BTW, has anyone found Jeff Sessions?  Hopefully he is busy preparing indictments, but I somehow doubt it.

Consuelo's picture



All of the 'shit' going down right now, brings new meaning to the term: 




And I don't mean the kind that involves a whip.   These fuckers are all tied together in some way, shape or form, to $corruption.    You cut one's rope, and the rest drown with him.   If it were not so, the pantsuit would have been in an orange jumpsuit long ago, right along with her cigar-diddling wife...  

hotrod's picture

So if you Deduct the exorbitant cost of ObamaCare the GDP is negative.

NugginFuts's picture

BINGO! Even Yellen has been saying this - you take out ObamaCare and Immigrants buying houses, and you will end up with negative GDP.

In a way, this will be sort of Trump's fault - he promised to do these things, but the way the numbers are cooked, he will burn down GDP and "sink" this fake economy. 

Consuelo's picture





ADP 280k jobs...!!!???

PurpleNIRPle's picture
PurpleNIRPle (not verified) Mar 8, 2017 1:06 PM




ajkreider's picture

As with Obama, I don't care about tepid GDP, as long as I get job and wage growth.

Bryan's picture

"This is taking place one week before Janet Yellen is expected to hike the interest rates by another 25 bps."


You mean, Yanet Jellen WILL hike interest rates by another 25 bps next week.  The probability is 100%, remember?

lasvegaspersona's picture

Relax, she is hiking when an R is in office. She has been saving up the pain. From Dec 2105 she knows exactly what will happen. That is why she did not hike in Sept...Hillary is a D.

lasvegaspersona's picture

We still have a GDP?

ichan's picture

This is so damn random. They're losing control LOL. Bottom Line: If it tanks after the rate hike. They can't blame Trump. So my moneys on no hike. 100% my ass.