Better Call Stan! Atlanta Fed’s Q1 GDP Forecast Falls to 0.5% (Retail Sales Decline for 2nd Straight Month, Weekly Earnings Growth Flat)

The Atlanta Fed’s Q1 2017 GDP forecast has declined further to 0.5%.

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 0.5 percent on April 14, down from 0.6 percent on April 7. The forecast for first-quarter real consumer spending growth fell from 0.6 percent to 0.3 percent after this morning’s retail sales report from the U.S. Census Bureau and the Consumer Price Index release from the U.S. Bureau of Labor Statistics.

Yes, retail sales advance MoM is down in March by -0.2% following February’s print of -0.3%. And CPI MoM was down -0.3% in March as well.

So, Q1  2017 GDP is now forecast to be … 0.5%.

Is this really surprising given that US Real Average Weekly Earnings growth has been generally decreasing since early 2015?

Some had better call Stan(ley Fischer) and tell him to look at the economic numbers before raising The Fed Funds Target Rate again and shrinking the Fed’s Balance Sheet!!!

Atlanta Fed Drops Q1 GDP Forecast To Just 0.6%, Lowest In Three Years

After today’s job report of only 98,000 jobs added in March, I was waiting to see if the Atlanta Fed would drop their Q1 GDP forecast from 1.2%.

Indeed they did! But it wasn’t just a surprisingly lame jobs report.

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 0.6 percent on April 7, down from 1.2 percent on April 4. The forecast for first-quarter real GDP growth fell 0.4 percentage points after the light vehicle sales release from the U.S. Bureau of Economic Analysis and the ISM Non-Manufacturing Report On Business from the Institute for Supply Management on Wednesday and 0.2 percentage points after the employment release from the U.S. Bureau of Labor Statistics and the wholesale trade release from the U.S. Census Bureau this morning. Since April 4, the forecasts for first-quarter real consumer spending growth and real nonresidential equipment investment growth have fallen from 1.2 percent and 9.7 percent to 0.6 percent and 5.6 percent, respectively.

Here is the evolution of tanking Q1 GDP.

Ron Swanson would NOT approve.

Jobs Report: March Wage Growth Slows To July 2009 Level as Retail Employment Slumps The Most Since The Great Recession

The March jobs report is out and there is good news and bad news. 

First, the good news.

The U-3 unemployment rate fell to 4.5%, the lowest since May 2007. The U-6 unemployment rate fell to 8.9%, the lowest since December 2007.

The bad news? Only 98k non-farm payroll jobs were added in March. Also in the bad news column, average hourly earnings for all employees (private) fell to 2.7% YoY. That is still below the first half of 2009 and all of 2007 and 2008.

This wage growth figure is consistent with the worst wage recovery after a recession in modern history.

Despite the lowest unemployment rate since 2007, retail employment continues its downward slide. True, retail employment often declines after the end of the holiday season, but the decline in February and March is the largest downward movement since The Great Recession.

A small number of jobs added was spread evenly across employment groups (except for retail).

Not in labor force jumped from 93,914k to  94,502k in March. That is 94.5 million not in the labor force.

All this slow wage growth contributes to empty retail stores.

US construction spending rose to nearly 11-year high?? (how about slowed to 3% YoY)

According to the US Census Bureau (as interpreted by Fox News). US construction spending rose to nearly an 11 year high.

WASHINGTON – U.S. developers ramped up construction spending in February to the largest amount in nearly 11 years, led by more building of homes, highways and schools.

The Commerce Department says construction spending rose 0.8 percent in February to the highest level since April 2006, after two months of declines.

Builders are rapidly putting up more homes in response to strong demand that has pushed up prices for existing homes. Yet it hasn’t yet been enough to relieve a shortage of homes for sale. The accelerated building could boost the economy this year.

State and local governments spent 0.9 percent more on construction, driven by roads, schools and recreational buildings.

The federal government, meanwhile, cut construction spending for the second straight month and has cut back 9 percent from a year ago.

Here is the report from the Census Bureau.

The 11-year headline from Fox is really overselling the report.

In fact, construction spending has slowed dramatically YoY to 3% for February 2017.

Non-residential construction spending? It slowed to under 1% in February YoY.

Residential construction spending actually rose 6.36% YoY, but still remains considerably lower than the 22.6% YoY in August of 2015.

The more accurate headline should have been “Construction Spending Slows.” But that is not a feel-good business headline.

But I suppose that Fox News’ headline is better than the Pawnee Sun headline.