We present two charts: one showing the dampened business cycle and the second on current growth forecasts. First, we are in abnormal period based on the low percentage of the time in recession. The data clearly shows that the business cycle has been dampened, yet the post-GFC period has been extremely mild. The question is whether this is the new normal. Have we eliminated economic downside? That conclusion is unlikely which leads to our second chart.
The Atlanta Fed GDPNow forecast is showing a significant decline in growth for the first quarter. Interest rates are higher. The projected growth expectations have been lower albeit the Blue Chip consensus is still at 2+ percent. Nevertheless, policy and trade uncertainty are causing many businesses to turn conservative. The GDPNow estimates provide a strong warning sign that if current trends continue, we will have a recession sooner than when most think.
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