Home Forex Q1 GDP forecast indicates slowing growth could persist

Q1 GDP forecast indicates slowing growth could persist

by SuperiorInvest

U.S. economic output is still on track for a substantially softer pace of growth, according to the first-quarter report scheduled for release later this month.

The expansion will be strong enough to minimize the risk of recession, but the slowing trend across GDP data will still be noticeable in a second consecutive quarterly update.

Production for the January-March period is currently estimated to rise 2.0% (seasonally adjusted real annual rate), based on the median of a set of nowcasts compiled by CapitalSpectator.com.

This moderate increase in economic activity, if correct, will mark a slowdown in growth from the strong 3.4% gain in the fourth quarter, which was a slowdown from the third quarter.

The current average increase of 2.0% in GDP for the first quarter remains unchanged from .

The recent stability of these revisions suggests, at this point, ahead of the release of the government's first quarter GDP report on April 25, that a nowcast of 2% is a reasonable estimate.

Although US growth has slowed, and is expected to slow further in the upcoming first quarter GDP report, one view of this slowdown is that the economy is stabilizing at a sustainable, “normal” pace rather than of descending into a recession later in the year.

In favor of this view is Chris Williamson, chief business economist at S&P Global Market Intelligence. Citing revised March PMI survey data, released earlier this week and included in the GDP flash data above, he says:

“Combined with an acceleration of growth in the manufacturing sector, the latest services PMI data suggests that GDP has increased at an annualized rate of approximately 2% in the first three months of the year. Confidence in the outlook for next year has also increased, which should help sustain solid growth in the second quarter.”

Composite production index against GDP

JP Morgan also sees a low risk of recession in the near term. A recent research note from the bank's trading desk warns that a slowdown in 2024 appears unlikely.

Meredith Whitney, founder and CEO of Meredith Whitney Advisory Group, also expects growth in the United States to continue through the end of the year.

Among the optimists is Goldman Sachs chief economist Jan Hatzius. He sees a growth bias persisting for the US economy and told CNBC:

“I'm certainly optimistic about this year. In terms of growth, we are well above the consensus, close to 3% growth this year.”

Meanwhile, “We are well below consensus in terms of recession risk. “We think 15% over the next 12 months, which is sort of the average probability of a recession, since we've had a recession about once every seven years in the post-war period.”

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