Some economists gave mixed numbers in their second-quarter GDP forecasts after a disappointing consumer spending report added to concerns about a slowdown in the US economy.
Some forecasters even think the world’s largest economy will shrink for a second straight quarter, surpassing the threshold of a technical recession.
Personal consumption up 0.2% in May, commerce ministry report on Thursday, falling short of economists’ expectations for a 0.4% increase. That represented a decline from the downward-revised 0.6 percent gain in April, suggesting spending in those months was weaker than previously thought.
A revision Wednesday to the first-quarter GDP report showed personal consumption rose just 1.8 percent in the first three months of the year, compared with previous reports of a 3.1 percent increase.
Weaker real consumption data in the spring, and upward revisions to first-quarter inventories in the GDP report, prompted Goldman Sachs to cut its second-quarter GDP estimate by 1 percentage point, up by just 1 percentage point. ,9%. Private consumption in the second quarter is now forecast to grow only 1.6% from a previous estimate of 2.3%.
Capital Economics now estimates consumption will grow by just 0.8% year-on-year in the second quarter, compared with a previous forecast of nearly 3%. Its GDP forecast has been cut to 1% annually, from a previous estimate of 2.7%.
Similarly, the Federal Reserve Bank of Atlanta’s GDPNow tracker now shows a 1% contraction in GDP in the June quarter.
Pantheon Economics downgraded its GDP estimate and now forecasts a 0.5% contraction in the second quarter.
“All the decline will be in inventory counts,” said chief economist Ian Shepherdson. He expects domestic final demand to grow only 1.5% in the second quarter, compared with 3% in the first three months of the year.
“Markets and media will call two-quarters of GDP decline a recession, but [National Bureau of Economic Research] Shepherdson said, referring to the research organization that determines whether the economy has officially entered a recession.
