Talk of a recession hitting the United States this year or the next continues to fade as new data reinforces the perception of a strong economy walled-off from external shocks by a resilient and buoyant private sector.
Economists estimate first quarter GDP numbers to be released Friday will likely reach a commendable 2.5%, compared to previous and gloomier estimates of near zero growth. The turnaround in the first quarter performance is stunning given Wall Street was pummeled by a massive sell-off into the end of December, while the freezing cold and bad weather in January and February slowed down much economic activity.
"Just the evolution of forecasts more broadly, maybe two months ago, people were talking about a recession," said chief economist Stephen Stanley at Pierpont Amherst.
"The reasons are pretty evident. We had the restraint from financial market tightening. We had the government shutdown which was a pretty significant blow to confidence, particularly given how long it lasted compared to what people were expecting."
The Dow Jones consensus forecast is for 2.5 percent growth. On the other hand, CNBC/Moody's Analytics GDP Survey shows economists with a median forecast of 2.4 percent.
The Atlanta Federal Reserve's GDP model based on data already released predicts GDP growth between the 2.2 percent and 3.4 percent, the latter being the pace seen in July to September 2018.
The Atlanta Fed boosted its numbers after data showed domestic retail sales in March expanded at their strongest pace in 1-1/2 years. It said this is the latest indication growth in the first quarter bounced back quickly after the federal government shutdown, which ended Jan. 25.
Some analysts said despite all the prophecies of doom, the U.S. economy did not collapse in the first quarter.
"On the contrary, next week's GDP figures are likely to show decent growth," said Commerzbank economist Christoph Balz. "In addition, companies have boosted investment, which argues against an imminent recession."
Surging private inventories might rain on this parade, said some analysts. Unicredit has revealed a 1.3 percent GDP forecast that is among the more pessimistic.
"After pronounced stockpiling in the second half of the year, our forecast assumes that inventories were a significant drag in Q1. The latest numbers suggest that the drag may occur only later," said Unicredit analysts in a note to investors.
