NABE Forecasters Lift U.S. GDP Outlook; Coping With Food Inflation By James Christie

Good day. In another sign of the U.S. economy's resilience, the latest consensus outlook of professional forecasters surveyed by the National Association for Business Economics calls for inflation-adjusted gross domestic product to increase 2.2% this year, up from a previous forecast of 1.3%. The Federal Reserve will have its say on the outlook for growth when it issues its quarterly economic forecast next month. Fed officials are currently expecting 1.4% GDP growth in 2024.

Now on to today's news and analysis.

Top News U.S. Economy Barrels Ahead

The U.S. was supposed to suffer a recession from higher interest rates. It didn't. Next economists predicted a big slowdown in growth. No dice. And now? The economy is going to be just fine after all.

That's the latest forecast by the nation's leading business economists, MarketWatch reports . U.S. gross domestic product will expand at a 2.2% annual pace in 2024, up from a prior forecast of just 1.3%, the National Association for Business Economics predicts.

Just how strong is that? The top sustainable speed of the U.S. economy is generally seen around 1.8% growth. In other words, the economy should continue to perform above expectations. GDP rose 2.5% in 2023 and 1.9% in 2022 as the damaging effects of the pandemic faded. (MarketWatch)

U.S. Economy Food Is Taking a Bite Out of Your Income. Consumers Get Creative.

Eating rice and beans instead of meat. Planning out meals a month in advance. Trying to raise more food in backyard gardens. Americans are changing the way they eat , shop and live to cope with a stretch of record food inflation.

Warehouse Boom Fades, and Hopes of California Region Fade With It Biden Calls Leaders to White House as Shutdown Looms

President Biden is calling congressional leaders to the White House for a Tuesday meeting as the clock ticks toward a partial government shutdown Friday night and a Ukraine aid package remains stuck.

Key Developments Around the World German Consumer Confidence Ticks Up Despite Gloomy Outlook

Germany's consumer confidence improved slightly , driven by hopes for rising incomes, even as sentiment remains subdued amid a weak economic climate-matching the expectations of economists polled by WSJ.

In NATO's Newest Member, 'Total Defense' Includes Teens, Retirees

By conveying to ordinary people the need for security, Sweden wins broad support for its military industry. "This is an area where I think Sweden punches above its weight," said Defense Minister Pal Jonson.

Japan's Consumer Prices Grow at Slowest Pace in Nearly Two Years

Japan's consumer prices rose at the slowest pace in nearly two years in January, but came in above expectations, backing views that the central bank will exit its negative interest rate policy, albeit cautiously.

Financial Regulation Roundup Bitcoin ETFs Are Off to a Roaring Start. Are Other Crypto Funds Next?

At least 10 Wall Street firms including BlackRock and Fidelity Investments have filed applications to launch what would be the first U.S.-listed ETFs holding ether, the second-largest cryptocurrency.

FTC Sues to Block $25 Billion Kroger-Albertsons Merger

The Federal Trade Commission sued to block Kroger's $25 billion bid for rival Albertsons saying the deal would lead to higher food prices, throwing into uncertainty the fate of one of the largest supermarket deals in history.

Forward Guidance Tuesday (all times ET)

8:30 a.m.: U.S. durable goods report, advance for January

9 a.m.: S&P CoreLogic Case-Shiller Home Price Indices

10 a.m.: The Conference Board Consumer Confidence Index; Richmond Fed Survey of Manufacturing Activity

10:30 a.m.: Texas Fed Texas Retail Outlook Survey


5 a.m.: EU business and consumer surveys

8:30 a.m.: U.S. gross domestic product for fourth quarter 2023, second estimate

8:30 a.m.: U.S. international trade and retail and wholesale inventories, advance for January

12 p.m.: Atlanta Fed's Bostic in fireside chat at Greater North Fulton Chamber of Commerce's 2024 North Fulton Focus Series, Roswell, Ga.

12:45 p.m.: New York Fed's Williams speaks at LIA Regional Economic Briefing, Garden City, New York

Research Fed May Delay Rate Cuts Until After Presidential Election

U.S. politics could be a reason for the Federal Reserve to wait until after the November presidential election to cut interest rates, Stephen Stanley, Chief U.S. economist for Santander U.S. Capital Markets, writes in a note. "The Federal Reserve is an independent central bank, but monetary policy matters to elected officials, which makes the Fed subject, to a degree, to the election calendar," Stanley writes. He expects the U.S. economy and inflation to remain hotter-than-forecast, supporting a delay in monetary easing. Stanley writes that the Fed's November meeting was moved back by a day, "creating one additional day of separation from the election." Assuming there is a clear winner, "I see the FOMC as free to start a new easing cycle at the November FOMC meeting," he writes.

-Paulo Trevisani

AI Boom Can Drive U.S. Growth

It won't be long before the flourishing of artificial intelligence begins to add impetus to economic growth in the U.S., economists Ian Shepherdson and Oliver Allen at Pantheon Macroeconomics write in a note. Companies are increasingly spending on AI-especially on software, but also on equipment-and this should boost investment figures, Shepherdson and Allen write, comparing the boom to the rise of the internet and the resulting boost to productivity. "AI firms presumably are seeing...near-vertical increases in revenue, which will hit the gross domestic product accounts via rising consumer spending and business investment in intellectual property," they write.

-Joshua Kirby

Commentary China Is Stockpiling for the Next Phase of the Chip Wars

Chinese chip makers have been rushing to stockpile equipment in anticipation of tougher Western export restrictions , particularly for lithography machines, which use light to print circuits on silicon wafers, Jacky Wong writes.

Basis Points Sales of new single-family homes in the U.S. increased by less than expected in January, adding to signs of a weak housing market at the beginning of the year. The Commerce Department said new home sales rose 1.5% from December and 1.8% from a year earlier, reaching a seasonally adjusted rate of 661,000. Sales had been expected to rise to 680,000, according to a poll of economists compiled by The Wall Street Journal. (Dow Jones Newswires) Manufacturing activity in Texas weakened in February, though by considerably less than in January, as demand returned and the outlook for factories ticked up, according to the Texas Manufacturing Outlook Survey released Monday by the Federal Reserve Bank of Dallas. Its index for general business activity increased from minus 27.4 in January to minus 11.3. (DJN) Businesses in Canada remain broadly optimistic about their future, as a Statistics Canada survey from January to early February found 68% being very or somewhat optimistic about the outlook over the next 12 months, up slightly from roughly 66% in the fourth quarter 2023. Just under 18% expect sales to increase in the next three months, compared with just under 16% the quarter before. Over the next three months, about 25% of businesses anticipate raising prices, and just under two-fifth expect to face at least one-labor related obstacle in that period, continuing a declining trend. (DJN) Annual U.K. shop-price inflation fell in February to its lowest rate in nearly two years supported by a slowdown in food prices on lower input costs, a report by NielsenIQ and the British Retail Consortium showed Tuesday. Feedback Loop

This newsletter is compiled by James Christie in San Francisco.

Send us your tips, suggestions and feedback. Write to:

James Christie , Perry Cleveland-Peck [], Nihad Ahmed , Michael Maloney

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

02-27-24 0716ET