by Calculated Risk on 2/10/2007 01:11:00 AM

From MarketWatch: Shepherdson watches weather, wins contest

Shepherdson has the most bearish forecast for first-quarter growth among the 41 economists we survey; while the median forecast is for 2.3% growth, Shepherdson is predicting no growth at all.

And people thought I was bearish!

He sees consumer spending rising at about half the pace as in the fourth quarter, with capital spending falling. Trade will be a modest positive, balancing out the drag from inventories. And housing investment will fall another 20%.

"Add it all up and you get not very much," Shepherdson said.

Of course the big drag is housing, but

...there's a second trend that most people aren't talking about yet, he said: A slowdown in manufacturing.

Capital spending fell in the fourth quarter and the year-over-year trend is the slowest in more than three years. Shepherdson figures that the slump in capital spending has barely begun.

And as we all know, non-residential investment typically trails residential investment by 3 to 5 quarters. So looking for a capital spending slump this quarter makes sense from an historical perspective.