[Thank you Senator Biden...] Atlanta Fed GDP tracker shows the U.S. economy is likely in a recession

[Leroy N. Soetoro]

https://www.cnbc.com/2022/07/01/atlanta-fed-gdp-tracker-shows-the-us-
economy-is-likely-in-a-recession.html

A Federal Reserve tracker of economic growth is pointing to an increased
chance that the U.S. economy has entered a recession.

Most Wall Street economists have been pointing to an increased chance of
negative growth ahead, but figure it won’t come until at least 2023.

However, the Atlanta Fed’s GDPNow measure, which tracks economic data in
real time and adjusts continuously, sees second-quarter output contracting
by 2.1%. Coupled with the first-quarter’s decline of 1.6%, that would fit
the technical definition of recession.

“GDPNow has a strong track record, and the closer we get to July 28th’s
release [of the initial Q2 GDP estimate] the more accurate it becomes,”
wrote Nicholas Colas, co-founder of DataTrek Research.

The tracker took a fairly precipitous fall from its last estimate of 0.3%
growth on June 27. Data this week showing further weakness in consumer
spending and inflation-adjusted domestic investment prompted the cut that
put the April-through-June period into negative territory.

One big change in the quarter has been rising interest rates. In an effort
to curb surging inflation, the Fed has jacked up its benchmark borrowing
rate by 1.5 percentage points since March, with more increases likely to
come through the remainder of the year and perhaps into 2023.

Fed officials have expressed optimism that they’ll be able to tame
inflation without sending the economy into recession. However, Chair
Jerome Powell earlier this week said getting inflation down is the
paramount job now.

At a panel discussion earlier this week presented by the European Union,
Powell was asked what he would tell the American people about how long it
will take for monetary policy to tackle the surging cost of living.

He said he would tell the public, “We fully understand and appreciate the
pain people are going through dealing with higher inflation, that we have
the tools to address that and the resolve to use them, and that we are
committed to and will succeed in getting inflation down to 2%. The process
is highly likely to involve some pain, but the worse pain would be from
failing to address this high inflation and allowing it to become
persistent.”

Whether that turns into recession is unknown. The National Bureau of
Economic Research, the official arbiter of recessions and expansions,
notes that two consecutive quarters of negative growth isn’t necessary for
a recession to be declared. However, since World War II there never has
been an instance where the U.S. contracted in consecutive quarters and was
not in recession.

To be sure, this tracker can be volatile and swing with every data
release. However, Colas noted that the GDPNow model gets more accurate as
the quarter progresses.

“The model’s long-run track record is excellent,” he said. “Since the
Atlanta Fed first started running the model in 2011, its average error has
been just -0.3 points. From 2011 to 2019 (excluding the economic
volatility around the pandemic), its tracking error averaged zero.”

He further noted that U.S. Treasury yields have taken note of the slower
growth prospects, falling significantly over the past two weeks.

“Stocks have taken no comfort from the recent decline in yields because
they see the same issue portrayed in the GDPNow data: a US economy that is
rapidly cooling,” Colas added.

— This story has been updated to reflect a downward revision Friday
afternoon from the Atlanta Fed.



--
"LOCKDOWN", left-wing COVID fearmongering. 95% of COVID infections
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Thank you for cleaning up the disaster of the 2008-2017 Obama / Biden
fiasco, President Trump.

Under Barack Obama's leadership, the United States of America became the
The World According To Garp. Obama sold out heterosexuals for Hollywood
queer liberal democrat donors.

President Trump boosted the economy, reduced illegal invasions, appointed
dozens of judges and three SCOTUS justices.