MA’s Ben Herzon was quoted in the article, “Markets will be watching economic data and whether Amazon can break $1,000” by Patti Domm with CNBC. (Excerpts shown below).
Economists on Thursday slashed second quarter GDP forecasts, based on April trade and inventories data. Many also revised down their forecast earlier this week because of weakness in new home and existing home sales data.
But it’s the first quarter that will be in the headlines Friday. The second reading of first quarter GDP is expected to show improvement to 0.8 percent, from 0.7 percent, according to the Rapid Update.
“It’s still a slug, but there’s temporary factors at play that we think won’t recur,” said Ben Herzon, senior economist with Macroeconomic Advisers. Weather was a factor as well as a big drop in inventory investment, which he expects to see reverse. He expects to see first quarter GDP unchanged at 0.7 percent.
Economists have been hoping for a big spring back in the second quarter to make up for the first quarter’s weakness, and Herzon said he’s not yet discouraged about the second quarter. However, he did trim second quarter tracking GDP growth to 3.2 percent from 3.8 percent Thursday.
“This is the first big downward move we’ve made and we’re still above 3 percent. It’s still too early to worry about the Q2 rebound,” he said. “There’s still reason to expect a rebound in Q2.”
Durable goods are expected to decline by 1.8 percent in April, after a 0.9 percent gain in March.
“It’ll give us a sense of whether equipment spending is going to continue pushing higher. We had a year straight of declines in equipment spending that turned around over the last couple of quarters, so orders for capital goods will be something to look at closely to see if there’s evidence the recovery in equipment spending is going to continue,” Herzon said. (click here for article)