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According to Bill Diviney, senior economist at ABN AMRO, US growth momentum looks to be slowing significantly into 2019, in spite of a solid Q4 GDP print last week and as a result, ABN AMRO is lowering theirr growth forecast for this year by 0.4pp, to 2.3% from 2.7% previously.

Key Quotes

“The ISM manufacturing PMI fell significantly in late 2018, and has continued to fall into 2019. Meanwhile, global activity has weakened further, and this is now feeding through into significantly lower US exports.”

“With the downturn in global manufacturing likely to persist over the coming quarters, US exports are likely to face further headwinds in the near-term.”

“A further reason for our growth forecast downgrade is the impact of the government shutdown. The direct effects of the shutdown, in delayed pay and lost consumption, were likely small – around 0.2pp in annualised growth in Q1. However, the harder-to-quantify indirect effects were probably bigger.”

“All told, we think the negative impact on Q1 GDP growth could be closer to 1.0pp annualised, although some of this will be made up in Q2 and Q3.”