Feb 15, 2019

Year-end data signals creeping downturn

Illustration: Aïda Amer/Axios

Economists are still in the dark about how a variety of factors — including the stock market slump, the government shutdown and ongoing trade tensions with China — impacted the U.S. economy.

The big picture: Economic indicators are moving to the downside, not the upside.

What we know: Thursday's release of the 4-week delayed U.S. retail sales report saw the biggest month-over-month drop since 2009. It was such a huge miss from the expected rise in spending that some economists are questioning the accuracy of the data.

  • "It appears that worries over the trade war and turmoil in the stock markets impacted consumer behavior more than we expected," the National Retail Federation said in a statement. "There's also a question of whether the government shutdown and resulting delay in collecting data might have made the results less reliable."

"This is against the backdrop of the only data we had, which was the blockbuster employment numbers," Diane Swonk, chief economist at Grant Thornton, told CNBC.

  • December's 222,000 new jobs number was revised lower, but still remains above trend. Though, as we reported last month, jobs growth markdowns show the data may not be breaking out the way initial estimates suggest.

Key components that factor into measures of economic growth are still missing, leaving a gaping hole in economists' estimates for growth.

  • The health of business inventories in December remains unknown after contracting slightly in November, the Commerce Department said yesterday.
  • Factory orders in the U.S. fell more sharply than expected in November, but we still don't know whether that rebounded or fell further in December.
  • December trade data, also delayed, is not expected until the beginning of March.

The bottom line: The data we have so far is pointing to a sluggish end to 2018.

  • Jim O'Sullivan, chief U.S. economist at High Frequency Economics, tells Axios the lackluster retail sales data could shave as much as 0.7% off of economic growth in the 4th quarter.
  • Economists at J.P. Morgan downgraded their GDP forecast 60 basis points to 2.0% based on the latest retail sales figures, while Barclays slashed its growth forecast to 2.1% from 2.8%, Reuters notes.

Go deeper

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 2 p.m. ET: 1,309, 439 — Total deaths: 72,638 — Total recoveries: 273,546Map.
  2. U.S.: Total confirmed cases as of 2 p.m. ET: 347, 003 — Total deaths: 10,335 — Total recoveries: 18,953Map.
  3. 2020 update: Wisconsin governor issues executive order to delay in-person primary voting until June.
  4. Public health latest: Asymptomatic children could play important role in coronavirus spread, new data from the CDC shows.
  5. States' latest: West coast states send ventilators to New York and other states experiencing a more immediate need — Data suggests coronavirus curve may be flattening in New York, Gov. Andrew Cuomo said.
  6. Jobs latest: Unemployment could already be at 13% "and moving higher," per former Federal Reserve Chair Janet Yellen.
  7. What should I do? Pets, moving and personal health. Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it.

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