The outlook for the U.S. economy is dimming after a report showed below-forecast business-equipment orders, adding to a string of weak data in other sectors.
JPMorgan Chase & Co. cut its forecast for second-quarter economic growth to 1% from 2.25% and said the Federal Reserve’s next interest-rate move is equally likely to be a hike or a cut, instead of an increase, chief U.S. economist Michael Feroli said in a note Friday.
Oxford Economics lowered its estimate to 1.3% from 1.6%, while Barclays Plc’s tracking forecast went down to 2% from 2.2%.
Friday’s report showing lower capital and durable goods orders in April — in addition to earlier data on retail sales, housing and manufacturing — suggest the economy is losing momentum.
That’s even before President Donald Trump ratcheted up his trade war with China this month by raising tariffs on some goods and threatening more levies.
“The concern is that firms just don’t have a strong sense of what the rules of the game are going to be, and that kind of uncertainty in principle, and in practice, can cause firms to be more cautious about undertaking long-term investments,” Feroli said by phone. “So that is certainly a risk we’ve been worrying about, which might be starting to manifest itself in the data.”
IHS Markit’s Macroeconomic Advisers lowered its tracking estimate for second-quarter growth by 0.2 percentage point to 1.7%, while the Atlanta Fed’s GDPNow tracker stood at 1.3%.
Fed officials have stressed in recent weeks that they don’t see a strong case for a rate move in either direction, though markets expect a cut this year and Trump has been pressuring the central bank for a deep reduction. Feroli’s note Friday is titled “Deteriorating Q2 GDP should put Fed on watch.”