This morning’s durable goods number came in extremely weak, and while you can blame the weather if you like, it’s going to have a real impact on GDP forecasts on the Street, according to Societe Generale’s Brian Jones.
He says these durable goods numbers, “will prompt a series of downward adjustments to Q1 and Q2 real GDP forecasts.” He notes the decline in core capital goods bookings as particularly worrying.
One of those downgrades may be coming soon, with Goldman’s Jan Hatzius suggesting his Q1 cut may be imminent.
From Goldman Sachs (via Zero Hedge):
The data increase the sense of downside risk to our Q1 GDP estimate of 3.5%. However, it is harder to say how much they matter beyond this, as durable goods orders are notoriously noisy. Industrial production of business equipment continues to rise and the industrial surveys continue to look great, including for surveys of capex spending plans (the Philly Fed measure of this just hit an 11-year high in March). We would therefore downplay the broader message from the durable goods report.
Today’s number is not the only reason we’re likely to see growth revisions. Of late, most data releases have been a disappointment, with housing numbers a stand out problem.
Photo: Societe Generale
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