U.S. economy lost steam at end of year, Atlanta Fed signals

By Jeffry Bartash, Market Watch—

The final three months of 2015 don’t look great for the U.S. economy — at least for now.

The Atlanta Federal Reserve on Monday cut its forecast for fourth-quarter growth for the fourth time in the past three weeks. The Atlanta’ Fed’s closely watched forecast model now suggests that gross domestic product grew a scant 0.7% from October through December.

In mid-December, the Atlanta Fed was predicting a 2% increase in GDP. It’s since lowered its forecast after disappointing reports on manufacturing, exports, construction spending and consumer spending.

If the forecast is correct, the U.S. would end up with a 1.8% annual growth rate in 2015.

By comparison the economy expanded at a 2.4% pace in 2014, 1.5% in 2013, 2.2% in 2012 and 1.6% in 2011.

Since the end of the Great Recession in mid-2009 the U.S. has expanded at a 2.1% clip — well below the historic average of 3.3%.

Of course, the Atlanta Fed’s forecast could change again, perhaps dramatically. The model is likely to be updated another dozen times before the government issues its first estimate of fourth-quarter GDP at the end of January.

In the second quarter of 2015, for instance, the Atlanta Fed initially predicted the economy would grow 0.9%. But the bank eventually raised its forecast to 2.4% as more evidence of stronger growth emerged.