From almost 2.5% GDP growth expectations in February [6], The Atlanta Fed's GDPNow model [7] has now collapsed its estimates of Q1 GDP growth to just 0.2% - plunging from +1.4% just 2 weeks ago [8]. The reality of plunging capex and no decoupling is starting to rear its ugly head in the hard data and as the sun warms things up, weather will start to lose its ability to sway sentiment. While sell-side consensus has dropped (Goldman, Morgan Stanley, and Barclays all cut today following Durable goods), it remains unable to quite accept the reality of massively weaker than expected macro data evident everywhere (except in the soft-survey PMI data).
March 3rd... +1.2%
[9]
March 12th... cut in half to +0.6%
[10]
March 18th... another 50% cut in growth to a mere +0.3%
[11]
And now.. March 25th... Q1 GDP growth forecast drops to just +0.2%
[12]
On the bright side - at least he still has a job and hasn't been moved to more important things.
As The Atlanta Fed explains... [13]
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2015 was 0.2 percent on March 25, down from 0.3 percent on March 17.
Following this morning's advance report on durable goods manufacturing from the U.S. Census Bureau, the nowcasts for real equipment investment and real inventory investment declined slightly.
And that decline is only getting started...
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