Wednesday, May 06, 2015

Growth Slowing to a Crawl

We may have had a contraction in Q1 and maybe an anemic Q2.
But the number that really caught our attention is the new "GDP Now" figure put out by the Atlanta Federal Reserve Bank. That number uses data, as they come in,to make real-time estimates for near-term GDP growth.
It's not perfect. But in the first quarter, GDP Now estimates were way below the Wall Street consensus by two full percentage points or more. But its final forecast of 0.1% growth came closest to the real number.
So with Wall Street again expecting a pickup in the second quarter — the consensus calls for 3%-plus growth — what does GDP Now see? An anemic 0.8% GDP gain. That estimate, if again correct, may mean the U.S. is falling into recession before the Fed even raises rates.
Well the good news is that the FED will probably not get a chance to raise rates anytime soon. The bad news is we will have 2 recessions on Obama's watch. It is strange that everyone else is running stimulus while the US wants to raise rates. I think the Government should cut payroll taxes again and give everyone a little spending shot in the arm.

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