This may be as good as it gets. Sputter-speed growth of around 2% and a moribund labor market. As the above chart suggests, the recovery is losing momentum. Here’s Goldman economist Jan Hatzius:
Goldman Sachs is turning increasingly bearish on the U.S. economy, expecting the nation to have added only 125,000 new jobs in April, as the effects of a warm winter, which buoyed employment late last year, wear off.
The forecast is far lower than the Reuters estimate of 170,000, and the average 177,250 jobs created every month from December to March. According to a report by the bank’s Chief U.S. Economist Jan Hatzius, the jobs report will be a further sign of a weakening economy, where inventory accumulation has accelerated and final demand growth remains sluggish.
“Real income growth remains soft, partly because of higher energy prices, wealth effects are not yet particularly positive, consumer confidence remains modest, and again some of the recent strength in retail sales probably reflects weather effects,” Hatzius said.
And this from Goldman market strategist Abby Joseph Cohen is equally as gloomy:
She said she agrees with Goldman economist Jan Hatzius’s forecast of the second half being more “difficult” than the first. “We have seen some deceleration in economic activity” after a mild winter that might have “puffed up” seasonal growth in the first quarter, she said.
Wait, the second half will be “more difficult” than the first? We might be lucky to have 2% growth in the first half. The econ team at Citigroup seems equally as sober: “The 1Q GDP data, a month of rising jobless claims, and likely back-to-back moderate gains in non-farm employment should dampen remaining optimism that 2013 would be the year of decisive growth acceleration in the U.S. Why should any other quarter in 2012 be markedly better than 1Q?”
And given the reluctance of big banks to make U.S. recession calls, I have to think that plenty of these folks are worrying we might get a negative quarter at some point this year. Imagine the political shock wave if, say, the third quarter dipped even a smidgen. To use President Obama’s favorite analogy, the U.S. economy would be back in the ditch. And that report would be released by the Commerce Department on Oct. 26, just 11 days before the election.