US GDP growth is slowing, again, as the chart of the Atlanta Federal Reserve’s “GDP Now” forecast shows:

  • Forecast Q1 growth has slipped to just 0.6% from an initial 3.4% at the end of January
  • Consensus economic forecasts are still much higher, but even they have fallen to 1.7% from 2.2%
  • The decline has been accelerating, due to disappointing data from a range of key indicators. as the Atlanta Fed note:

    “The forecast for first-quarter real GDP growth fell 0.4% after the light vehicle sales release from the U.S. Bureau of Economic Analysis and the ISM Non-Manufacturing Report On Business from the Institute for Supply Management on Wednesday and 0.2% after the employment release from the U.S. Bureau of Labor Statistics and the wholesale trade release from the U.S. Census Bureau this morning. Since April 4, the forecasts for first-quarter real consumer spending growth and real nonresidential equipment investment growth have fallen from 1.2% and 9.7% to 0.6% and 5.6% respectively.”

    Worryingly, therefore, we seem to be repeating the usual pattern of disappointment – with New Year optimism being followed by harsh reality – as the US Federal Reserve’s deputy chairman, Stanley Fischer, noted nearly 3 years ago:

    “Year after year we have had to explain from mid-year on why the global growth rate has been lower than predicted as little as two-quarters back.

     

    The key issue, of course, is that policymakers have still not accepted that the US economy is inevitably moving into a low-growth mode, due to its ageing population.  As the Chief Economist of the Bank of England, Andy Haldane noted recently, the impact of:

    “Demographics in mainstream economics has been under-emphasized for too long

    There is little sign of the new policies that are urgently required to take account of the changes that have taken place in life expectancy and fertility rate.  As a result, forecasts continue to be made on the basis of wishful thinking at the start of each New Year. As I noted in December:

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