Atlanta Fed Expects GDP at 5.9%, Fastest Growth Since 2009: Accurate?

Atlanta Fed Expects GDP at 5.9%, Fastest Growth Since 2009: Accurate?

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KEY POINTS

  • The Atlanta Federal Reserve predicts a nearly 6% growth in the US economy for the third quarter of 2023, a significant increase from previous recession calls at the start of the year.
  • The GDPNow estimate by the Atlanta Fed rose to 5.9% from 5.0% due to a 3.9% increase in housing starts in June, potentially marking the strongest economic growth since Q4 2021.
  • July’s retail sales show a 0.7% increase and the control group, contributing directly to GDP, rising 1.0%, exceeding economists’ projections.
  • Positive jobs data, historically low unemployment, and growing monthly wage growth are also supporting GDP through consumer spending.
  • The year 2023 has seen upward revisions in economic growth, with initial readings of Q1 GDP at 1.1%, revised to 2.0%, and Q2 GDP growth exceeding expectations at 2.4%.
  • However, the robust economic growth has raised concerns about potential implications for inflation, which some economists worry could negate recent inflation improvements.

Atlanta Fed’s Q3 GDP Projection Surges, Stirring Debates

The Atlanta Federal Reserve has just unveiled a substantial Q3 GDP projection of 5.91%, triggering discussions within financial circles.

When compared with industry estimates, the magnitude of this projection becomes evident. JPMorgan’s 2.5% forecast appears conservative in contrast, and even the Blue Chip average consensus falls short. For instance, the St. Louis Fed recently released their “realGDP” projection, and it’s starkly different.

If Atlanta’s projection holds with an annualized growth of 5.9%, the upcoming quarter will outperform any in the past decade. The robust economic surge is prompting analyses of its potential implications.

BeSpoke Invest is advocating for careful consideration. Amid the projections, they emphasize the importance of prudent investment decisions. Thoughtful choices remain vital.

Beyond investment considerations, the projection’s potential impact on policy decisions is notable. The prospect of a strongly rebounding economy might influence the Federal Reserve’s interest rate determinations.

In the bigger picture, the Atlanta Fed’s bold Q3 GDP projection carries significant weight. It’s prompting a reconsideration of economic norms. As the projection makes waves, the central message underscores the massive disconnect between economists who “know” what’s going on and economists who “think they know” what’s going on.

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