US: Growth likely will be weak in Q1-2023 – Well Fargo
|Data released on Thursday showed the US economy grew at a 2.9% annualized rate during the fourth quarter, above the 2.6% of market consensus. Analysts at Wells Fargo point out the outturn represents the second consecutive quarter of above-trend GDP growth. However, they warn that while the economy came into the fourth quarter with solid momentum, it ended the quarter with a distinct loss of momentum.
Underlying components of the Q4 GDP data were not quite as impressive
“The outturn was a bit stronger than the consensus expectation of 2.6% growth, and it represents only a modest downshift from the 3.2% growth rate that was registered in the third quarter. To put the GDP growth rates of the last two quarters of 2022 into perspective, consider that U.S. real GDP growth averaged 2.3% per annum during the economic expansion of 2010-2019. In short, the U.S. economy grew at an above-trend rate in the second half of last year.”
“This loss of momentum at the end of the fourth quarter means that the solid growth rates that the U.S. economy posted in the second half of 2022 likely will not be repeated in the first quarter. Indeed, we currently forecast that real GDP will be more or less flat in Q1-2023 on a sequential basis.”
“Strength in the labor market is a sound fundamental for the outlook for consumer spending, at least in the near term. But further monetary tightening by the Federal Reserve—we look for the FOMC to raise rates by a combined amount of 75 bps at the next three policy meetings—will exert further headwinds on the economy.”
“We forecast the economy will slip into a modest recession around mid-year.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.