Photo: Crowbot, Flickr
In a new note, Goldman acknowledges ongoing economic strength, and signs that GDP might re-accelerate come Q2.However, there are three reasons to think US growth will be held in check.
Goldman’s Zach Pandl writes:
We see a few reasons to hold off on major changes to the forecast for now. First, financial conditions may not be as easy as our GSFCI suggests. The Federal Reserve’s latest Senior Loan Officer Survey, for instance, showed a tightening in lending standards for commercial and industrial loans. Also, the European financial crisis may still spillover into US lending to a greater degree. These aspects of credit conditions are not captured in the GSFCI. Second, gasoline prices have been picking up, especially on a seasonally-adjusted basis. As we saw last year, the US economy remains sensitive to energy price shocks. Finally, seasonal adjustment problems and unseasonably warm weather may have given some of the recent data a boost, and these effects should fade over the next few months.