$GS Says We May Have Moved Over the Hump Away From Fiscal Contraction

“…..Prior to the jobs report, we saw really nice numbers on ISM Manufacturing, ISM Services, consumer credit, and initial jobless claims.

Goldman Sachs is starting to get excited and take note. Here’s a segment from a new note, which was posted on Calculated Risk:

In our annual forecast rollout last November, we predicted that the US economy would move “over the hump” of fiscal contraction, with still-sluggish growth in most of 2013 followed by a gradual acceleration to an above-trend pace in late 2013 and 2014. But the recent data raise the tantalizing prospect that the “hump” may already have occurred. … The most visible data point is the strong February employment report showing a nonfarm payroll gain of 236,000 and a drop in the unemployment rate to 7.7%. But arguably the more important one is the apparent resilience of consumer spending despite the $200bn tax increase that took effect in January. … In our view, it is still too early to close the books on the early-2013 consumption slowdown. After all, we only have auto sales and consumer confidence in hand for February so far. And we still think that the weakness in federal spending will restrain growth in coming quarters. But if consumption picture holds up in light of upcoming data, a modest upward adjustment to our growth forecast would probably make sense.

Of course, the sequestration has just barely begun…”

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