Atlanta Fed Forecasts Negative Q2 Growth

If you needed any more confirmation that the United States economy is likely in a recession, then today we have the latest Atlanta Federal Reserve GDPNow official forecast showing another contraction in the second quarter of -1.0% down from 0.3%. The GDPNow forecast updates as new data comes in and the latest decline is due to a deterioration in private inventories and consumer spending data.

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To be fair, the technical recession definition from National Bureau of Economic Research (NBER) is nuanced and is not just two quarters of real GDP contraction. A valuable breakdown on this topic from EFB Macro Research is here. Although real growth is turning negative, employment growth is not yet at recessionary levels but is likely to follow.

Although many blue chip consensus forecasts have shown a pickup in GDP throughout the second quarter, the Atlanta Fed’s projections have declined from 1.9% to -1% over the last two months. The rapid deterioration in growth expectations to come in 2022 has been a key point we’ve highlighted in previous macroeconomic updates. All of the “the economy is strong” calls are now disappearing quickly.

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