NY Fed cuts US first-quarter GDP view to 1% after dismal data

NEW YORK (Reuters): A New York Federal Reserve forecast program on Friday slashed its estimate on US economic growth in the first quarter in the wake of this week’s worrisome data on inflation, retail sales and industrial output.

The regional central bank’s forecast model halved its projection on first-quarter growth for gross domestic product to 1.08% from 2.17% calculated a week ago. Signs of a flagging economy have led Fed policy-makers to become cautious on raising key lending rates further. They also signaled they were open to end the reduction of the Fed’s bond holdings earlier than they had planned. Earlier Friday, the Fed said domestic factory production fell 0.9% last month, the steepest fall in eight months.

Prices of imported goods and services into the United States fell 0.5% in January, resulting in the largest annual decline in nearly 2-1/2 years, according to the Labor Department.

The Commerce Department said on Thursday retail sales plunged 1.2% in December for their biggest drop in more than nine years.

N.Y. Fed’s Nowcast model also cut its estimate on GDP growth in the fourth quarter of 2018 to 2.23% from 2.41% it calculated a week earlier.

Citi US economic index posts biggest weekly drop since 2011

Fed policymakers see one US rate hike, or none, as growth slows