U.S. Outlook: Trimming our GDP forecast
Granted, there isn’t a lot of hard first-quarter economic data to hang our hat on at this point. With the U.S. government shutdown entering day 28, more and more important U.S. economic indicator releases are being delayed by the shutdown.
Only the Bureau of Labor Statistics and the Federal Reserve are still releasing data. The Bureau of Economic Analysis, Census Bureau, and Commerce Department have all halted their releases due to the government closure.
For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on Jan. 18.Key observations:
- We’ve cut our Q1 U.S. GDP forecast by 0.4 percentage points to 1.7, to reflect lost economic activity due to the prolonged government shutdown, as well as lost consumer spending resulting from the negative wealth effects from the Q4 stock market selloff.
- We are penciling in a 0.3 percentage point hit to GDP from the government shutdown alone.
- The measurable drop in household wealth will crimp consumer spending, especially for high-income households that are exposed to the stock market volatility.