Time to Brace for GDP (and USD) Downside Surprise?

Time to Brace for GDP (and USD) Downside Surprise?

This Thursday marks the release of the initial estimate for the fourth quarter of 2023 GDP in the United States. If predictions hold true, there will be a noticeable deceleration in economic growth, with the market anticipating an annualized growth rate of 2%, a significant drop from the previous quarter's 4.9%.

This slowdown underscores the impact of the Federal Reserve's interest rate hikes on the economy. Chief economist Ian Shepherdson from Pantheon Macroeconomics suggests a higher likelihood of a downside surprise in the GDP figures, potentially leading to a decrease in the US dollar. Commodity currencies might be some of the best to watch in this scenario, with US oil hitting prices not seen since Christmas 2023.

However, not all banks share Shepherdson’s viewpoint.

Here are the growth expectations from some major banks:

• ING: 2.5%
  
• Deutsche Bank: 2.3%
  
• Wells Fargo: 1.7%
  
• Goldman Sachs: 2.1%
  
• Citi: 2.0%