Atlanta Fed’s GDP Tracker Jumps to 2.8% for First Quarter

The economy appears to be growing at nearly twice the pace the Federal Reserve expected at the close of last year, adding to doubts about whether the central bank will cut interest rates later this year.

The Atlanta Fed’s GDPNow tracker, which estimates gross domestic product based on incoming economic data, rose on Monday to indicate a 2.8 percent rate of growth in the first quarter, up from the reading of 2.3 percent last week.

This is the first reading of growth in the January through March period since the conclusion of the quarter.

GDPNow is not a forecast of GDP. Instead, it is based on a model that estimates growth based on recently released economic data.

In December, the Federal Reserve median estimate of Fed officials was that the economy would grow 1.4 percent this year. At the March meeting, the median estimate rose to 2.1 percent. The consensus among economists, which often lags behind incoming data, is for two percent growth in the recently completed quarter.

On April 1, the #GDPNow model nowcast of real GDP growth in Q1 2024 is 2.8%: https://t.co/T7FoDdgYos #ATLFedResearch

Download our EconomyNow app or go to our website for the latest GDPNow nowcast: https://t.co/NOSwMl7Jms pic.twitter.com/0RCczAthaf

— Atlanta Fed (@AtlantaFed) April 1, 2024

The Fed views the longer run potential growth rate of the economy as around 1.8 percent. Growth rates faster than that are seen as raising the risk of inflation.

The strength of economic growth and the buoyancy of the labor market may convince the Federal Reserve to hold off on interest rate cuts. Fed chairman Jerome Powell said on Friday that strong economic data would allow the Fed to be patient when it came to starting rate cuts, although he still expects the Fed to cut this year.

The market’s implied odds of rate cut in June have fallen to around 57 percent on Monday from around 70 percent a week ago.