Economists at JP Morgan said that they now see much slower growth in the second quarter, only 1%, as compared to their previous forecast of 2.25%. Fresh outlook is far from the 3.2% reported in the first quarter.
"The April report on durable goods was disappointing, especially the details of orders and shipments of manufactured goods.
Following the terrible April report on retail sales in the last week, it assumes that the increase in activity in the second quarter sharply lower compared to the growth rate in the first quarter, "- economists say.
GDP Tracking Atlanta Fed in the first quarter showed GDP growth of 1.3% for the quarter.
Economists at JP Morgan have also changed their forecasts for Fed policy, and now they are not sure what the next step will be to raise interest rates.
"Previously, we had expected that the next step from the Fed will increase, although at the end of 2020. Now we see that the next step, the risks about evenly distributed between the increase and decrease. We see increasing chances of a rate cut. One of the reasons - the downside risks to growth ", - said in a research note.
The yield on 10-year Treasury bonds on Friday was at 2.32%, after falling 2.29% on Thursday. Markets predict a rate cut by 25 basis points this year, and at least one further reduction in 2020.
"At the beginning of the second quarter, net net business investment accelerated, as uncertainty and geopolitical risks are a serious hindrance to the company's decision to order new equipment," - said Chris Rupki, chief financial economist at MUFG Union Bank. "Business confidence is clearly lacking in the manufacturing sector of the economy."
Economists at JP Morgan said that the key risks that they see for growth in the US include the uncertainty associated with a trade war, the impact on business sentiment and slowing global growth.
In an April report on durable goods orders overall fell by 2.1% last month due to a significant reduction in orders for aircraft and automobiles.
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