Daily Management Review

Economists Give Thumps Up To GDP Growth In The U.S. Beyond The Gloominess Hovering On Q1’s Results


03/27/2018


Economists consider that a temporary weakness may prevail on the quarter one’s GDP growth while the rest of the year will still be “fine”.



Amid the growing expectations of 2018’s first quarter’s GDP performance missing the “earlier projections” majorly, one can still look forward to “good news” as analysts sees the “rest of the year” to be still “fine”.
 
During the close of last week, the above mentioned point was “driven home” as the latest “Wall Street forecaster” Bank of America Merrill Lynch knocked down the “growth estimates for the first three months of 2018”. The economists from the firm expect the GDP growth to be only at 1.7%, while recently the estimates were at 2.3%.
 
Nevertheless, “Michelle Meyer and Anna Zhou”, economists from “BofAML”, consider the said “weakness as temporary”. Therefore, the second quarter could witness “a stronger payback”, whereby the growth projected “run at a 3.7 percent pace”, leaving the “original 3.3 percent estimate” behind.
 
In fact, the third quarter is also being viewed with a “bump” which show a rise from “3.3 percent to 3.6 percent”. With this all think that the “annualized GDP gain” will be near 2.9% or somewhere just below 3% mark, as targeted by “Trump administration. Moreover, in the beginning of the week, the Federal Reserve revised its “2018 forecast” and raised it 2.7% from 2.5%. In the words of the Chief Investment Strategist at Charles Schwab, Liz Ann Sonders:
“The economy still looks strong and we believe the upcoming earnings season will be solid”.
 
Data coming from the manufacturing units early in 2018, leaving the estimates behind, has pumped up the hopes. At one point, the “GDPNow tracker” of the Atlanta Fed indicated a growth at 5.4%, whereby showing the “best quarter of the recovery”. However, after this point, there has been a “slew of reports” that demonstrated a “disappointing auto sales”, “retail” and housing” among others and virtually bridled the optimism of “every economists”. While, CNBC reported that:
“BofAML's revision still keeps its forecast above the lowest, believed to belong to UBS at 1.4 percent”.

Furthermore, the “durable goods orders” in the month of February rose to 3.1% being well ahead of the consensus estimates of 1.7%. Capital Economics’ U.S. Economist, Andrew Hunter, stated:
“With borrowing costs low, capacity utilization on the rise and the recent corporate tax cuts likely to provide further support, we expect business investment to continue to expand at a healthy pace over the coming quarters”.
 
As per the Atlanta Fed, it maintained “its 1.8 percent projection” and did not get swayed by the durable goods order gain, as it says that the said gains were “offset by a slightly below consensus reading on new home sales”.
 
Nonetheless, the Rapid Update tracker of CNBC, which derives its numbers from a “select group of economists”, showed “more optimistic” results for the first quarter at 2.3%. While CNBC also added:
“The market will get the final revision for the fourth quarter, which was last reported at 2.5 percent and expected to stay there, according to consensus. However, Rapid Update puts the final estimate at 2.7 percent, and BofAML expects 2.8 percent. BofAML expects growth to slow to 2.4 percent in 2019”.
 
 
References:
www.cnbc.com







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