Less than a week ago, following the latest deteriorating US data, we noted that the Atlanta Fed had slashed its Q4 GDP forecast from a reasonable 2.3% to 1.8%. Then, earlier today, after the latest recessionary data from the US manufacturing sector, we expected further cuts to be imminent from the Federal Reserve which unlike its peers, actually has an accurate track record of predicting GDP growth.
Atlanta Fed Q4 GDP update to drop to mid-1%— zerohedge (@zerohedge) December 1, 2015
We were not disappointed, and moments ago the GDPNow website announced that the latest model forecast for real GDP growth in the fourth quarter of 2015 has now tumbled to a paltry 1.4 percent on December 1, down from 1.8 percent on November 25. "The decline occurred this morning after the Manufacturing ISM Report On Business from the Institute of Supply Management and the construction spending release from the U.S. Census Bureau."
The Atlanta Fed is now nearly 50% below the consensus Q4 GDP estimate of 2.5%
We are not sure when the last time the Fed started a tightening cycle with a 1.4% GDP baseline, but we are confident we will have to go quite far back in time to find the answer.