Economy could feel more of a pinch from weak manufacturing than expected: Natixis
Industrial production declined in the first three months of the year for the first time since the third quarter of 2017, and that could signal economic growth is weaker than some economists are forecasting.
Natixis economist Joseph LaVorgna said the Federal Reserve's industrial production index correlates very closely to GDP growth, and the correlation between its quarterly annualized changes and real GDP growth is around 70%. "It seems if there was a time that industrial production and GDP would match up well it would be at time when there's a relatively large inventory build," he said."When you unwind inventory, you would expect to see production slow."
"To me the production data suggests there's may more downside risk to Q1 than people currently believe," he said.
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