––
Atlanta Fed slashes Q4 growth forecast to 1.5% | Photo credits: dj venus / CC BY-NC 2.0
NEW YORK, Feb.14 (Reuters) – The sharp contraction in retail sales in the United States in December led the Federal Reserve in Atlanta to sharply cut its fourth-quarter growth forecast to less than 2%.
Gross domestic product (GDP) is said to have increased by 1.5% annualized in the fourth quarter of 2018 following a 1.2% drop in retail sales in December, the largest in nine months, shows the GDPNow forecast model from the Atlanta Fed.
This estimate compares to a previous projection of 2.7% growth going back a week.
The latest estimate is the lowest since this model was used in late October to estimate fourth quarter growth. The strongest estimate was 3.0% and then it was revised downwards following disappointing statistics.
The Atlanta Fed also revised its forecast for fourth-quarter household spending growth to 2.6% from 3.7%.
Finally, it doubled the likely subtractive effect on GDP of a reduction in investment in inventories, to 0.56 percentage point from 0.27.
Earlier this year, JPMorgan Chase and Barclays also cut their US growth forecast in the last quarter of 2018 following the retail sales statistic. (Richard Leong Wilfrid Exbrayat for French service)
–
–
