Brendan McDermid | Reuters
A trader works on the floor of the New York Stock Exchange.
The Atlanta Fed's GDPNow initial model estimate shows negligible growth for the first quarter of just 0.3 percent.
The Atlanta Fed notes that the initial estimate of fourth quarter real GDP growth, released Thursday, was 2.6 percent, or 0.8 percentage points above its final GDPNow model forecast that it released on Wednesday.
The report, which was released on the Atlanta Fed's website, sent stocks lower in late morning trading.
Many Wall Street economists see growth below 2 percent for the first quarter, but for the most part they remain above 1 percent. Goldman Sachs cut first quarter growth to 0.9 percent Friday, and Macroeconomic Advisors cut its forecast for first quarter to 1 percent, from 1.1 percent.
Economists mostly expect a snap back in the second quarter, and the Goldman Sachs economists also raised second quarter growth to 2.9 percent from 2.7 percent. They said their first quarter forecast includes an expected drag from inventories, sequentially slower consumption growth, a drop in residential investment, and 0.4 percentage points drag from the government shutdown.
Friday's data included personal consumption expenditures, ISM manufacturing and consumer sentiment, all of which came in below forecast. The spending data included December's data that had been delayed due to the government shutdown.
Many economists expect the weakness in the first quarter to be transitory, with the consumer and businesses affected by the government shutdown and severely cold weather brought on by the polar vortex. There are also signs that the trade conflicts have impacted some parts of the economy.
