The Atlanta Federal Reserve has in the past several days reduced its estimate for first-quarter US economic growth to a rate of less than 1 per cent, muddying expectations for a a strong start to the year.
The GDPNow tracking model dipped from an annualised growth rate of 1.2 per cent to 0.9 per cent last Friday, on the heels of the monthly employment report and Treasury statement. The data prompted a downward revision in expectations for consumption growth and spending on equipment and residential and commercial structures.
The forecast had climbed as high as 3.4 per cent on February 2, after readings on the factory sector and construction spending, according to the Atlanta Fed.
Reports that have been released this week have continued to affirm the 0.9 per cent reading, with Wednesday’s data on consumer-level inflation and retail sales weighing further on expectations for consumption growth.
“This is obviously in contrast to the dramatic improvement we’ve seen in confidence so let’s assume that [the second quarter] will see a nice bounce back. It better,” said Peter Boockvar, chief market analyst at The Lindsey Group.
The world’s biggest developed economic expanded at a fairly tepid 1.9 per cent pace in the fourth quarter. Wall Street economists are still betting on a pick-up to 2.1 per cent in the current quarter, far above the GDPNow estimate, according to a Bloomberg survey.
The Commerce Department releases its first reading on first quarter growth on April 28.