Americas > North America > United States > Here’s a forecast that should worry investors betting on a second-half surge in the economy

United States: Here’s a forecast that should worry investors betting on a second-half surge in the economy

2017/06/20

Investors betting on a strong pickup in economic increase may want to consider a new estimate hitting Wall Street on Monday.

The New York Federal Reserve presently expects U.S. economic increase at an annualized rate of 1.9 % for the second quarter, down from a 2.3 % estimate. The bank as well expects annualized increase of 1.5 % in the third quarter, down from 1.8 %.

The New York Fed revised its second-quarter economic growth estimate lower to 1.9 percent from 2.3 percent.
However, the Atlanta Fed expects second-quarter GDP to grow by 2.9 percent, while CNBC's Rapid Update survey is tracking second-quarter growth at 2.8 percent.

The U.S. economy grew at a dismal annualized rate of 1.2 percent in the first quarter.

The U.S. economy grew at a dismal annualized rate of 1.2 % in the initial quarter.

To be sure, the New York Fed's estimate is an outlier to additional bullish estimates. For instance, the Atlanta Fed still expects second-quarter GDP to grow by 2.9 %, while CNBC's Rapid Update survey is tracking second-quarter increase at 2.8 %.

Wall Street has been closely watching the U.S. economy as the Fed seems determined to raise interest rates once additional this year and start unwinding its $4.5 trillion balance sheet before 2017 ends.

"The uncertainty surrounding this unprecedented decision will source a stiff headwind in the face of the economy which has from presently on to simmer," Jeremy Klein, chief market strategist at FBN Securities, said in a note Monday, referring to the balance-sheet reduction.

The central bank raised rates last week for the second time this year and maintained its estimate of three total rate hikes for 2017.

Still, investors are not convinced the Fed will be able to hike once additional this year. Market expectations for a rate hike thie year are below 50 %, according to the CME Group's FedWatch tool. The data as well showed a rate hike isn't priced in until next March.

"I reiterate that larger institutions, which do not have the ability to manage their positions nimbly, should start to rein in some of their effusiveness," Klein said.

A stronger economy is as well making it less crucial for President Donald Trump and Congress to pass tax reform this year.

Related Articles

UNWTO: International tourism – strongest half-year results since 2010
2017/09/09 Destinations worldwide welcomed 598 million international tourists in the initial six months of 2017, some 36 million additional than in the same period of 2016. At 6%, increase was well above the trend of recent years, making the current January-June period the strongest half-year since 2010. Visitor numbers reported by destinations around the world reflect strong request for international travel in the initial half of 2017, according to the new UNWTO World Tourism Barometer. Worldwide, international tourist arrivals (overnight visitors) increased by 6% compared to the same six-month period last year, well above the sustained and consistent trend of 4% or higher increase since 2010. This represents the strongest half-year in seven years.
Not a choice for some tourists and residents
2017/09/09 St. Petersburg, Florida, has been voted to have the nicest white sandy beaches in the United States, and along with the rest of Florida, this thriving tourism destination on Tampa Bay is in for a nightmare at the same time as Hurricane Irma hits at category 3 or 4 strength. The massive hurricane that has been barreling through the Caribbean, is expected to run up the east coast of Florida, which would mean tropical storm conditions along the west coast on Sunday. However, the bay area remains just inside the cone of uncertainty.
Saudi King to visit White House in 2018
2017/09/08 King Salman of Saudi Arabia will make an official visit to Washington early next year for talks with President Donald Trump, the White Home said Wednesday. King Salman and President Trump discussed how to advance shared goals such as strengthening security and prosperity in the Middle East The two leaders held a telephone conversation in which they discussed how to advance shared goals such as strengthening security and prosperity in the Middle East, the White Home said in a statement.
Spotify, Hulu target students with discounted bundle
2017/09/08 U.S. college students can buy Spotify Premium music streaming and Hulu TV streaming for a combined, deeply discounted $4.99 per month, in a new student subscription bundle the companies announced on Thursday to lure younger consumers. The entertainment bundle, $13 cheaper than the regular combined price, is the new effort in the industry to gain young millennial customers, who favor inexpensive online streaming and listening.
Equifax says hack potentially exposed details of 143 million consumers
2017/09/08 Equifax Inc (EFX.N), a provider of consumer credit scores, said personal details of as a lot of as 143 million U.S. consumers were accessed by hackers between mid-May and July, in what could be one of the major data breaches in the United States. The company’s shares were down 8.7 % at $134.16 in next-market trading on Thursday. The details accessed included names, social security numbers, and, in some cases, driver’s license numbers, Equifax said.