Atlanta Fed GDPNow Nails it: Economy ‘Surprises’ to Downside, Growth Near Zero

Jon Blogosphere, Economy, Fiscal Policies, Government, Market Commentary

Lousy consumer spending & the ‘weather.’ Inflation hits Fed target.
The US economy surprised economists to the downside once again, a terrible habit it has picked up over the past years. GDP adjusted for inflation inched up only 0.7% ‘compound annual rate of change.’ This means that if the economy keeps growing at this rate for four quarters in a row, economic growth for the entire year would only be 0.7%.
By comparison, in 2016, economic growth was 1.6%, matching 2011 for the worst rate since the Financial Crisis. So 0.7% is ugly. It was the weakest growth since Q1 2014.
But wait. It gets worse. This is the seasonally adjusted ‘compound annual rate of change,’ according to the ‘advance’ estimate of the Bureau of Economic Analysis. The BEA’s seasonally adjusted ‘annual rate of change’ – without the ‘compound’ – which is what the Atlanta Fed’s GDPNow model is forecasting, was only 0.2%, just a hair above zero. From the BEA:
Economists blamed the weather. It was too warm this time around, rather than too cold, which is the usual explanation for Q1 debacles.

This post was published at Wolf Street on Apr 28, 2017.