Last week, first Goldman and then JPMorgan [3]cut their GDP forecasts, in the case of the latter by 0.5% to 2.0% from 2.5%. The JPM report cited the Atlanta Fed GDPNow model we first exposed earlier last week [4]. And unfortunately for the Wall Street consensus, which is still hoping for some dramatic surge in US "growth" in the 3 remaining weeks of the first quarter, things are looking bad, because according to the most recent update to the Atlanta Fed model which mimics the methodology used by the BEA to estimate real GDP growth and which will be revealed in less than 2 months when the preliminary Q1 GDP number is revealed, the economy in the first quarter is tracking at just 1.2%, smashing any recent momentum, and the lowest since the Polar Vortex. "Here we go again [5]" indeed.
Here is the latest from thbe Atlanta Fed, whose revised GDP forecast has not budged from a week ago.
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2015 was 1.2 percent on March 6, unchanged from its March 2 reading. The nowcast for the contribution of net exports to first-quarter real GDP growth fell from -0.5 percentage point to -0.8 percentage point following this morning's international trade report from the U.S. Census Bureau. This was offset by increases in the nowcasts of equipment investment and inventory investment.
[6]
So about that rate hike...
Source: Atlanta Fed [7], and Spreadsheet Model [8]
