NEW YORK (Reuters) – Some of Wall Street top banks marked down their growth estimates on the U.S. economy in the first quarter as they blamed disappointing data on consumer spending in February on mild weather and slow payout of tax refunds.
The banks’ forecasts for gross domestic product expanding in a 1.0 percent-1.5 percent range reinforced the view of another weak start for the world’s biggest economy going back to 2014.
Earlier Friday, the Commerce Department said consumer spending, which accounts for more than two-thirds of U.S. economic activity, edged up 0.1 percent. That was the smallest increase since August and was weaker than a 0.2 percent rise in January.
J.P. Morgan <JPM.N> economist Michael Feroli said in a research note he lowered his view on U.S. gross domestic product in the first quarter to 1.0 percent from 1.5 percent.
“Some of that weakness may be transitory: warm weather depressed utility spending in January and February to its weakest two month stretch in over 25 years. The slow payout of tax refunds may have also hindered spending growth in the first two months of the year,” Feroli wrote.
Barclays <BARC.L> economists downgraded their tracking estimate on first-quarter GDP to 1.4 percent from 1.6 percent, while Goldman Sachs <GS.N> analysts reduced their to view 1.5 percent from 1.8 percent.
Another sluggish annual start for GDP has been consistent for the past several years, tracing back to the first three months of 2014 when GDP contracted by 2.9 percent because of an unusually chilly winter across the country that damped business activity.
A rebound in economic growth has also followed a weak first-quarter.
J.P. Morgan’s Feroli upgraded his GDP estimate for the second quarter to 3.0 percent from 2.0 percent in anticipation of rebound in consumer spending.
(Reporting by Richard Leong; editing by Chizu Nomiyama and Grant McCool)