I wrote last week in Can the Fed stop printing? that it was unlikely the Federal Reserve’s US growth forecasts would be met.
It didn’t take long for that to be locked in stone (less than a week), with the final estimate of March quarter GDP coming in much weaker-than-expected. As a recap, first-quarter GDP was revised down this week, from an earlier estimate of (-1%) to (-2.9%), which is the weakest growth in five years. That means that for the Fed’s forecast of 2.3% to be met this year, we’re going to need to see growth of around 4% annualised, in each quarter for the rest of the year. That’s not something we’ve seen in this recovery to date, and not something we are likely to see now. More likely, we’ll see something in the order of 1% to 1.5% year-on-year growth to the December quarter 2014.
