Some time in the second week of February, when the market was tumbling on, among other things, fears of a U.S. recession, the Atlanta Fed was scrambling to give the all clear signal on the US economy when it surprised watchers by releasing a far stronger than consensus Q1 GDP nowcast of 2.7%.
Since then things have once again not gone quite as planned, and following the latest flurry of poor economic data, the Atlanta Fed just confirmed that the current US economy is about as weak as it was when the Atlanta Fed first started estimating it at the start of February with a paltry 1.2% forecast.
As of moments ago, this is where we are now:
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2016 is 1.4 percent on March 24, down from 1.9 percent on March 16. After this morning's durable goods manufacturing report from the U.S. Census Bureau, the forecast for first-quarter real equipment investment growth declined from 0.9 percent to -1.4 percent while the forecast for the change in inventory investment in 2009 dollars declined from -$9 billion to -$11 billion. The forecast for real residential investment growth fell from 14.6 percent to 7.8 percent after Monday's existing home sales release from the National Association of Realtors and yesterday's new home sales and construction cost releases from the Census Bureau.
In other words, the US economy is once again rapidly deteriorating, which is precisely what the Fed wants now as it needs every possible economic cover to justify its recentl flipflop decision to lower the number of forecast hikes from 4 to 2.
Expect even more economic "weakness" in the coming weeks as the Fed remains concerned that the S&P is just not high enough or, said otherwise, bad news is once again bad news.
And for those wondering if the poor Atlanta Fed GDP unleashed a mini buying spree in the past few minutes, the answer is yes: after all, the Fed is back in the corner where only bad news about the economy can push stocks higher.