Economists of financial services firm JP Morgan have declared that the US economy is likely to grow at the rate of 1.5 % during the first quarter due to signs of slowdown in its business expenditure. The experts stated that though they expected fourth quarter growth to be at 1.6 % it had to be lowered to 1.4 % after release of data about December durable goods sales that went up by 1.2 % due to spike in aircraft orders. But economists of JP Morgan say that fall in core capital goods orders by 0.7 % shows that annualized growth of capital goods was almost zero during fourth quarter and so this quarter they are likely to be just a little higher.
In fact other economists still predict that growth during the fourth quarter is likely to be just above 2 % and the median forecasts by economists during Moody’s analytic program is 2 % for fourth quarter and 1.8 % for the first quarter. JP Morgan’s economists stated that inventory data from durable goods section was below expectations so now the inventories will only be around $31 billion in fourth quarter.
The economists trimmed the first quarter growth to 1.5 % as they felt that domestic demand was low specifically after the surprise decline in December retail sales. However all is not gloomy as they see growth of 2.25 % during next quarter based on expectations of normal consumer demand and recovery in government spending after the recent shutdown. They say that delay in publishing the January data was due to government shutdown as only now they have been able to access durable goods reports. They predict that consumer spending would be the biggest driver of growth and housing sector could contribute to the growth. Economists of Citigroup maintained their economic growth estimate at 2.5 % for fourth quarter.