Ugh! Is this the worst case economic scenario?
I noted this morning that the regional manufacturing indexes — including this morning’s Chicago and Dallas figures — have almost without exception been below expectations.
If the April ISM, out tomorrow, and the April jobs report, due out Friday, are also below expectations, we will see gross domestic product growth revised downward by many firms.
How much downward? Jan Hatzius at Goldman Sachs on Friday said this week’s jobs report will likely show growth of just 125,000, well below consensus of about 168,000. Why the weak forecast? He says jobs growth in the winter was largely in the cold weather states — suggesting jobs were pulled forward by warm weather.
Hatzius is expecting just two percent GDP growth in the second and third quarters.
This is the worst of all possible worlds: It is not robust enough for any real job growth (we would need north of three percent GDP growth for that), but it is not weak enough for the U.S. Federal Reserve to act aggressively by instituting some form of quantitative easing , or a new form of "Operation Twist."
Where does that leave us? Languishing.
And that’s exactly what is happening: This will be one of the lightest volume days of the year. We will trade a little over three billion shares on the consolidated tape for the New York Stock Exchange. We have been averaging about 3.7 billion for the year.
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