Next (LON:NXT) week’s initial estimate for US GDP in the first quarter is on track for a sharp downshift in growth, based on the median nowcast calculated by CapitalSpectator.com via several sources.
Output is projected to rise by a weak 0.7% (annualized real rate) in Q1, according to the median estimate. If correct, the economy will slow sharply following Q4’s solid 2.4% increase. The Bureau of Economic Analysis will publish its initial GDP estimate for Q1 on Apr. 30.
Today’s revised median nowcast extends a string of sharply softer Q1 estimates in recent weeks. For our previous update on Apr. 10, the first-quarter median nowcast was 0.8%.
The more worrisome aspect of today’s Q1 data: it doesn’t yet reflect the extreme trade-related turmoil that’s roiling the US and the global economy. The Q2 data, in other words, is expected to present a fuller picture of how tariffs are affecting economic activity.
The IMF on Tuesday weighed in on the outlook and cut its outlook for US and global growth, citing tariffs as a factor. “Risks to the global economy have increased, and worsening trade tensions could further depress growth,” IMF chief economist Pierre-Olivier Gourinchas wrote yesterday.
Vanguard head of global economic research and senior international economist Kevin Khang also sees cause to downgrade expectations.
“We’re going to see a significantly softer economic growth this year,” he told Yahoo Finance yesterday. He added that there’s a lot of uncertainty clouding the outlook. “The variance around our forecast is unusually large we’re in the state of what we would call dancing with recession. So, recession may not be our baseline, but it’s we’re very close to that.”