So much for the idea that the economy is close to overheating.
A lower than expected retail sales number Wednesday has many economists revising down their forecast of first-quarter gross domestic product (GDP).
The Atlanta Fed’s GDPNow estimate fell to 1.9 percent, down from 2.5 percent just five days ago. At the start of February, the Atlanta Fed’s estimate called for GDP growth above 5 percent.
Economists at JP Morgan lowered their estimate to 2.0 percent, down from 2.5 percent. Goldman Sachs lowered its estimate from 2 percent to 1.8 percent.
U.S. retail sales fell for a third consecutive month in February, according to data released Wednesday by the Commerce Department. Economists had forecast a month-over-month gain of 0.3 percent in February. Instead, sales fell by 0.1 percent.
January’s decline, however, was revised to 0.1 percent, up from the initial read of 0.3 percent.
The decline was driven by a fall in purchases of big-ticket items such as cars and building materials.
Consumer spending appears to have slowed at the start of the year, after growing a 3.8 percent annualized rate in the fourth quarter. The slowdown suggests that those who warned the Trump tax cuts could cause the economy to overheat were off-track. If anything, it now appears that the tax cuts will give the economy a needed boost.