Deutsche Bank Just Took Out The Hatchet To Its Economic Outlook

knife chop

Photo: zenobia_joy via Flickr

One of the biggest bulls on the street, Deutsche Bank’s Joe LaVorgna just sliced his economic outlook:In light of Monday’s economic news we made two important forecast revisions. January personal consumption was weaker than we anticipated, especially after revisions. Spending increased just +0.2%, and December was revised 0.2% lower to +0.5%; hence, inflation-adjusted consumption fell -0.1%. Consequently, we are trimming our 3.5% current quarter consumption estimate by one full percentage point. This effectively lowers Q1 real GDP from 4.5% to 3.8% and full year growth from 4.3% to 4.1%. Following the impressive Chicago PMI report, which printed the strongest headline reading since July 1988, we lifted our February ISM forecast by two full points to 62.0 (it was 60.8 in January). By the nature of their construction, diffusion indices tend to mean revert toward a level closer to 50—even if economic activity remains robust; so we expect the production surveys to begin drifting lower in coming months.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at

Tagged In

gdp moneygame-us