The Federal Reserve Bank of Atlanta just completely wiped out its US growth forecast for the first quarter: It now expects that there was no growth at all in Q1.
That’s pretty amazing for a country that looks likely to raise interest rates within the next six months.
Here’s the Atlanta Fed’s GDPNow index, a regular forecast update for what the central bank things GDP growth will be:
The Atlanta Fed expected 1.9% growth annualised in Q1 just two months ago — not a rapid pace, but decent given the bad Winter weather.
It’s been rapidly reduced as US economic data has continually disappointed expectations. Here’s Citigroup’s economic surprise index, where negative figures indicate that a region is getting more negative economic news than expected.
Check out that US line:
To what extent this weakness can be blamed on bad weather is massively important for the US economy. Here’s Oxford Economics’ assessment:
Part of the blame can be put on adverse weather. Indeed, some of the most weather sensitive sectors, including motor vehicles and building material & garden equipment, were negatively impacted by the bitter temperatures and severe snowstorms experienced in the winter months.
Wwe view the recent slowdown in household outlays as a result of poor weather, still-cautious consumers in the face of modest wage growth and consumers deciding to pocket a little of the “gas savings.”
If they’re right, the lack of growth in Q1 isn’t too much to worry about — so here’s hoping they are.