U.S. Outlook: The pause that refreshes, or a sign of dark days ahead?
The first quarter economic slowdown is coming into focus as recent economic indicators confirm a continuing U.S. and global manufacturing slowdown that appears to be intensifying in February. The preliminary Markit Manufacturing PMIs for February fell into contraction territory in the Japanese and the Eurozone economies and revealed softening growth in the U.S. manufacturing sector as well.
Some of the drop in the PMI is likely a response to uncertainties around U.S.- China trade negotiations and the possibility of a hard Brexit from the Eurozone. Manufacturers are reporting that the uncertainty is causing them to delay orders and curtail near-term business investment plans.
For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on Feb. 22.Key observations:
- Nondefense capital-goods orders for the United States dropped another 0.7% in December and have declined in four of the last five months.
- We expect the initial release on fourth quarter U.S. GDP growth will show that GDP growth slowed to around 2.2% annualized from 3.4% in the third quarter.
- We forecast U.S. GDP growth at a modest 1.5% annual rate in Q1.