The Atlanta Fed Isn't Optimistic That The US Economy Will Grow

The Atlanta Fed Isn't Optimistic That The US Economy Will Grow
Carl Hazeley

over 1 year ago1 min

Source: Federal Reserve Bank of Atlanta

Last week was poor for US data: industrial production was weaker than expected in May, and manufacturing output and retail sales both fell compared to the month before. And with the jump in mortgage rates, US housing construction declined too.

Partly in response to these data points, the Atlanta Federal Reserve now forecasts stagnant – in other words: 0% – second-quarter economic growth in the US (green line), way below economists’ average forecast of around 3% annualized growth (blue line).

abrdn’s economists think that’s too pessimistic and that last week’s data understates the US economy’s momentum. The investment manager points out that we’re still lacking a number of important data points for the quarter, including trade, which is likely to rebound and boost growth.

Of course, the US Federal Reserve just hiked interest rates again (and by more than many had forecast), so it’ll be important to watch fresh economic data closely for clues that higher rates are causing a faster-than-expected slowdown in activity. If that happens, second-quarter economic growth would fall short of most forecasts.

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