April 05, 2019
Early 1st Quarter Forecasts of Near Zero Growth Now Seem off the Mark
Dr. Edmond J. Seifried
When the Federal Reserve reversed its hawkish stance of 2018 into a more supportive policy of 2019, many pundits began to forecast very weak growth for 2019. Certainly, much of the data released in January and February supported that point of view.
The February 2019 retail sales report was very sobering. U.S. retailers reported lower sales in February indicating consumers were holding back on purchases. Retail sales, which include purchases at stores, restaurants and online, declined a seasonally adjusted 0.2 percent in February from the previous month.
On March 11, the Atlanta Fed’s much-admired economic growth indicator, GDPNOW, shocked the markets. The model indicated that first-quarter growth was expected to be only 0.2 percent. However, the economic outlook began to turn around late in the quarter as more data indicated the growth rate was improving. The Atlanta Fed updated their GDPNOW forecast on April 1, 2019. Growth is now predicted to be a healthy 2.1 percent for the quarter.
The quarter is now complete, and the economists at the Bureau of Economic Analysis (BEA) will begin the mammoth task of calculating the actual GDP growth rate for the first three months of 2019. The BEA report on the economy is scheduled to be released April 26, 2019.