by Wolf Richter
Atlanta Fed’s GDPNow kisses the Rosy Scenario goodbye.
After a crummy 4th quarter, everyone was looking for a turnaround. Annualized economic growth in Q4 of 1.4% was way below the “stall speed” of 2%, a growth rate below which the US economy has trouble staying airborne. After having wrongly hyped it for five years in a row, Wall Street economists aren’t even talking anymore about “escape velocity,” that elusive economic boom that would set in miraculously in the spring.
Nevertheless, forecasts for the first quarter by blue chip economists in early January ran between 2% and over 3%, with the “consensus at 2.5%. Even the Atlanta Fed’s GDPNow forecast — a strictly data-driven model of the first estimate of GDP, however off it might be — figured by mid-February that growth in Q1 would come in at above 2.5%.