The Atlanta Fed's latest model estimates a 52.8% GDP contraction this quarter as the US grapples with COVID-19
- A rolling
GDP"nowcast" from the Federal Reserve Bank of Atlantasees US growth shrinking 52.8% on the coronavirus' economic fallout.
- The estimate is down from a May 29 projection of -51.9% growth and takes new data from the manufacturing and construction industries into account.
Fedchair Jerome Powell said in a mid-May "60 Minutes" interview that second-quarter GDP "could easily be in the 20s or 30s" before recovering in the second half of the year.
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The Atlanta Fed's latest estimate is down from a May 29 projection of -51.2% growth, and factors in the Institute of Supply Management's Monday report. The organization's purchasing managers' index stabilized to 43.1 from 41.5 in May, ticking slightly higher but still landing deep in contraction territory.
The Fed also considered the Census Bureau's recent construction report, which showed spending dropping 2.9% in April.
Second-quarter personal consumption expenditure growth slipped to -58.1% from -56.5%, the central bank said. Private domestic investment growth declined to -62.6% from -61.5%.
While not the central bank's baseline forecast, the GDPNow metric serves as a running estimate of current-quarter growth based on economic data releases. The metric's next update is scheduled to be released on June 4.
Fed officials have long projected the economy will significantly shrink through the second quarter. Central bank chairman Jerome Powell told "60 Minutes" on May 17 that the period's GDP contraction "could easily be in the 20s or 30s," and that a complete recovery "could stretch through the end of next year."
The nation's economy shrank 5% in the first quarter, setting up a sharper second-quarter decline to officially push the US into a recession.
Powell also estimated the unemployment rate could soar as high as 25% before trending lower. April's jobs report pegged the rate at 14.7%, its highest level since the Great Depression and one of the first indicators of the pandemic's dire economic toll. The Bureau of Labor Statistics is scheduled to release its May jobs report on Friday, offering investors new insight into whether the Atlanta Fed's projection is too bleak or closer to reality.
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