We know by now that no US or world economic numbers will look positive now or the next Q or 2.
Wednesday we will see the 1st preliminary number for US GDP for Q-1. The number is projected to be negative, it will be nowhere close to as bad as what is expected for Q-2 and perhaps Q-3 in the COVID-19 downturn.
The WS-J’s consensus economist estimate for Q-1 US GDP is −3.5%. Bloomberg is calling for a drop of 4.0% for Q-1, but it expects a 1.2% gainer for the price index.
The New York Fed’s Nowcast report, using actual reported data, has forecasts of just −0.4% for Q-1 and −7.8% for Q-2 of Y 2020.
The GDPNow report from the Atlanta Federal Reserve is looking at a 0.3% decline, based on the last update from 24 April. The Atlanta Fed specifies that its GDPNow figures do not capture the full impact of COVID-19 beyond its effect on GDP source data and already-released relevant economic reports. It also does not anticipate the impact of COVID-19 on economic reports that have yet to be reported beyond the standard internal dynamics of its model.
Those estimates compare to the prior GDP growth rate of 2.1%, and note that there have been only 3 negative individual Quarters of GDP growth in the past 10 yrs, since the end of the Great Recession.
With consumer spending representing 72% or so of GDP, strength in household goods and items that benefit from the stay-at-home and work-from-home economy are unlikely to overcome the damage caused by entire factories being closed, apparel retailers shuttered, along with all non-essential services being closed. Auto sales are way off (NYSE:F), (NYSE:GM), (NYSE:FCAU) and Boeing (NYSE:BA)is selling very few planes at this time.
On Top of most of America working from home and being stuck there for most of March, the price of Crude Oil cratered toward the end of the month and kept falling in April. That will weigh on the GDP reports ahead, as the weighted USD values used for these reports will be far less from production, shipments, gasoline sales and anything tied to planes, trains and automobiles.
Yes, this report is expected to be negative, but it is also expected to be nowhere close to as negative as the reports coming in Q-2 of Y 2020 when a full calendar Quarter can be measured under the COVID-19 cronavirus chaos impact.
Some economic reports showed pockets of growth well into March. That may not be the case for the upcoming economic reports for April, May and June.
We have to wait to see and we may be surprised as businesses and factories reopen and consumers go back to work.
They are already going out in defiance of lockdowns and happily spending their money. Bars, restaurants, and beauty parlors are open or opening through the country, but cinemas are waiting for the launch of the Spring tentpoles midSummer, I suggest that there will be lines around the blocks.
There are 100’d of billions of Bucks pent up waiting to flow into the economy.
Have a healthy day, Keep the Faith!