The Atlanta Federal Reserve has been raising its growth forecast for the second quarter the last few weeks and following the stellar jobs report on Friday, upped it again. The regional fed now says the economy will grow at a 4.8% rate — a number unheard of during the Obama presidency.
The U.S. economy is expanding at a 4.8 percent annualized rate in the second quarter, the Atlanta Federal Reserve’s GDPNow forecast model showed on Friday.
The forecast has been climbing higher following the release of a series of good economic data. On May 25, the measure foresaw four percent GDP growth. This rose to 4.7 percent Thursday and ticked even higher on Friday following the better than expected jobs report for May.
The Atlanta Fed forecasts a big boost in private sector fixed investment, which includes capital investment in machinery, land, buildings, vehicles, and technology. Earlier, the Atlanta Fed saw this growing at 4.6 percent. But following the release Friday of a construction spending report from the U.S. Census Bureau and the Manufacturing ISM Report On Business from the Institute for Supply Management, this was upgraded to 5.4 percent growth.
Consumer spending is expected to grow at a 4.6 percent rate, up from 3.4 percent prior to the Friday data releases.
A cautionary note: If the Federal Reserve believes the economy is growing too fast, they may look to put on the brakes by raising interest rates. But so far, wages have not kept pace with economic growth and other indices show no sign of an inflationary spiral underway.
The economy, as some economists are saying, is in a “Goldilocks Zone” where strong growth is not leading to dangerous inflation. And with increased investment on the horizon, the chances of continued job growth and falling unemployment looks solid.