That big fourth-quarter growth scare looks like it’s not happening

That big fourth-quarter growth scare looks like it's not happening

Just a few weeks ago, economists had been expecting near-zero growth for the fourth quarter. Positive surprises in the economic data since then have changed views considerably. Expectations now are for growth in the 1.3% to 2% range. What a difference a couple weeks can make: A slowdown in fourth-quarter growth to near-zero that appeared nearly inevitable has disappeared, fading even with manufacturing still stuck in contraction. A closely watched Federal Reserve gauge that had been pointing to a Q4 flatline in mid-November has reversed course, with Atlanta’s GDP Now indicating 1.3% growth, down from a high of 1.7% a week ago. The tracker had risen in recent days following the release of some positive personal income, durable goods and housing data, then came off a bit on Monday’s ISM Manufacturing survey that was a bit below expectations. Overall, though, the picture for Q4 does not look nearly as bleak as it did the previous two months. Continued pressure from the U.S.-China tariffs, a slowing global economy and low inflation levels had raised fears that a year that started off with a 3.1% GDP gain would end with basically nothing. That no longer appears to be the case. "We went from a recession scare earlier this summer then to a growth scare to what I would argue is setting ourselves up for a pretty solid 2020, in part because the high-frequency data isn’t as bad as people thought," said Joseph LaVorgna, chief economist for the Americas at Natixis. "People […]

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