FXStreet (Delhi) – Research Team at Nomura, suggests that the outlook for the US economy has deteriorated in recent weeks as the financial conditions have tightened significantly and incoming economic data suggest that the economy carried less momentum out of last year than previously expected. Key Quotes “Core retail sales, which excludes volatile components such as food services and drinking places, auto dealers, building materials, and gas stations, fell sharply by 0.3% in December (Consensus: +0.3%), setting a low jumping off point for consumption in 2016. Industrial production retreated further in December by 0.4% after a revised 0.9% decline in November (previously reported as -0.6%) while the results from the NY Fed’s January Empire State manufacturing survey and the Philly Fed’s manufacturing survey point to a further slowdown in industrial activity to start the year. In light of the incoming data, we reduced our forecast for Q4 GDP growth to 0.2% from 0.7%, previously. We see little momentum at the start of 2016. In addition to the lower jumping off point for personal consumption, the recent sell off in equities and its potential to dampen consumer confidence lowers the prospects for a strong rebound. Taking all these factors into account, we now expect top line growth to clock in well below potential in Q1 2016 at 1.1% before reaccelerating closer to 2% in Q2. Thereafter, in the second half of 2016, better consumer spending and some rebuilding of inventories should push growth above 2%. Nevertheless, the economy appears to be on somewhat tenuous footing and could be vulnerable to negative shocks. Financial conditions have tightened notably to start the year and according to the December National Federal of Independent Business’s small business survey, firms are starting to see tighter credit conditions and fewer respondents expect the economy to improve. Further deterioration of financial conditions and a step down in global growth momentum remain key risks to our consumer-led growth outlook.” For more information, read our latest forex news.