Since It Is Now Cool To Downgrade The US, JPM Just Became Da Fonz: Feroli Cuts Q1 2012 GDP Forecast To 0.5% From 1.5%

Tyler Durden's picture

Now that even Joe LaSagna is no longer imbibing the Kool Aid, and is scrambling to regain some credibility by enunciating such occult (for his mouth) words like "recession" and "downturn", it has become all too obvious, that just like in August of 2010, right before Jackson Hole 1.0, the scramble for who can downgrade the US in the most unique, bizarre and sadomasochistic fashion is on - these people need to get paid after all, and without the Fed cutting checks, they may all have to face comp committees that demand to see performance. Alas with everyone on Wall Street missing today's Philly Fed by eight unbelievable standard deviations, base comp is all said economists can hope for. In other words, and as predicted over and over and over, the scramble to make the baseline case a recessionary one, is here. And since it is now cool to be pessimistic again, here is JPM's Michael "Fonzarelli" Feroli who just projectile vomited all over the US' growth prospects...two short weeks after he did precisely the same: "Growth in the current quarter looks only moderately softer than our previous projection, however the risks to our previous projection for 2.5% growth in Q4 are now very clearly to the downside and we are lowering forecasted growth in that quarter to 1.0%. We are also lowering 12Q1 growth to 0.5% from 1.5%. In sum, over the next four quarters we don't see growth that is much faster than the growth that took place in the first half of this year." Translation: "help us Obi Ben Bernanke, you are our only hope."

Full note:

A few weeks ago we made some large downward revisions to our projection for growth in coming quarters, hoping to get in front of the weaker trajectory of the economy. Since then the weakness has gotten back in front of us. Consumer sentiment has tumbled and household wealth has deteriorated. Survey measures of capital spending intentions have moved lower and the housing market shows little sign of lifting. Small businesses, retailers, builders and manufacturers all report a weaker business environment. Global growth has disappointed and foreign growth forecasts have been taken lower. In response we are lowering our projection for growth, particularly in the quarters around the turn of the year.

 

Growth in the current quarter looks only moderately softer than our previous projection, however the risks to our previous projection for 2.5% growth in Q4 are now very clearly to the downside and we are lowering forecasted growth in that quarter to 1.0%. We are also lowering 12Q1 growth to 0.5% from 1.5%. In sum, over the next four quarters we don't see growth that is much faster than the growth that took place in the first half of this year. Declining energy prices should help to cushion some of the weakness in the economy, and the still-low levels of cyclically-sensitive spending could reduce the chances of getting a negative GDP quarter. Nonetheless, the risks of a recession are clearly elevated. Below is our updated forecast table. We will have a more extended discussion of the growth outlook and our forecast revision in tomorrow's publications.