Back in 2014, Goldman’s Jan Hatzius was proud to announce he anticipated the US economy growing solidly in 2015, at a so-called “above consensus” pace, somewhere in the 3%-3.5% range. Then, a few months ago, the same Goldman strategist unabashedly declared that the US economy would grow by 3% in Q1.
Then… it snowed, leading to the worst economic contraction for the US economy since, well, last winter. It snowed then too, but nobody could possibly anticipate it snowing two years in a row.
And, earlier today, after the BEA’s latest report that US consumer failed to spend as much as expected for yet another month (meaning spending contracted during both the gas price-plunge phase and the subsequent rebound), Goldman came out with this.
- As a result of the weaker-than-expected spending numbers, we reduced our Q1 GDP tracking estimate by two-tenths to +1.2%.
Not surprising: we said as much would happen a month ago when we first reported that much to the shock of the world, the Atlanta Fed itself was expecting a 1.2% GDP growth in Q1. Since then, the Atlanta Fed has crushed its own forecast and now expects only 0.2% growth.
Which probably explains why Goldman “accidentally” suffered an excel fat finger, and moments ago Hatzius’ subordinate, David Mericle, was trotted out to advise Goldman’s clients that the firm had a glitch with its earlier GDP forecast, and what it meant to revise Q1 GDP to was 33% lower, not from 1.2% but 0.8% (down from 1.4% previously, and down from 3.0% two months ago).
To wit:
We made an error in our original estimate of the GDP tracking implications of the February PCE report. We have now reduced our Q1 GDP tracking estimate to +0.8%. We regret the mistake.
Or, just like last year!
How one can “mistake” a GDP estimate by 33% based on a personal spending number missing consensus and Goldman estimates by a tiny 0.1% is unclear but is also irrelevant. What is abundantly clear is that nobody at Goldman, the Fed, or anywhere else, has any idea how to estimate economic growth in a world in which all the data is fabricated and goalseeked, and where not one but two “harsh winters” in a row can subtract over $100 billion in trendline economic growth.
