Atlanta Fed Predicts 0.2% Q3 GDP, But $100k BTC Calls Hold Strong

The Atlanta Federal Reserve’s GDPNow tracker has downgraded its growth estimate for Q3 of 2021 to 0.2% — suggesting the economy might have not grown by any significant extent during the period. Economists view supply chain bottlenecks as the major cause but believe factors such as inflation and labor shortages have exacerbated the slowdown.

Meanwhile, as more and more financial experts turn to Bitcoin to hedge against rising inflation, speculations that BTC would end the year close to $100k rises. 

Low Growth Seen In Q3 2021

Contrary to expectations, the US economic recovery has slowed sharply in the last three months. Congestion and blockages in the production system, labor shortage, and rising prices, among other things, have contributed the most to this slowdown. 

During this period, the Atlanta Fed’s GDPNow has downgraded its economic forecast three times. About two months ago, it estimated the GDP to be around 6%. However, it lowered the estimation to 1.5% one month ago, then to 0.5% last week, and yesterday to just 0.2%.

Today, the Commerce Department released its estimation for annualized gross domestic product growth in Q3, saying the economy grew at a 2% rate. The Dow Jones had expected to see an increase of 2.8%. 

However, some economists appear to be unconcerned. They argue that as soon as supply chain bottlenecks are resolved, the recovery will continue at a fast pace. Joseph LaVorgna, a Natixis chief economist for the Americas, told CNBC:

“The weakness is a function of supply distortions more than anything. The economy is still fundamentally strong, and I wouldn’t look at this one quarter of being reflective of where we’re going.”

Natixis, a corporate and investment bank, had a more encouraging outlook, estimating the economic growth to be coming in at 3.3%. While this was too optimistic, it was still largely down from the 6.7% increase in the second quarter. LaVorgna added:

“To the extent that we haven’t fully reopened, at least in terms of travel and leisure activities, things are healthier than what they seem. I don’t look at this as a sign of things to come.”

Supply Chain Chaos and Inflation May Persist

Financial experts acknowledge that high prices and supply chain bottlenecks are not going away any time soon. 

As of now, approximately 80 ships are stuck outside docks in Los Angeles and Long Beach, waiting to deliver around $24 billion of goods. The congestion and blockages are the results of enormous demand for goods at a time when there is a stark shortage of key components (such as semiconductors).

In addition to this, more than 4 million workers left their jobs in August, prompting a labor shortage. Inflation concerns are also beginning to resurface; last week, Federal Reserve Chairman Jerome Powell declared inflation pressures could last longer than anticipated. At a hearing before the Senate Banking Committee, Powell said:

“Inflation is elevated and will likely remain so in coming months before moderating. As the economy continues to reopen and spending rebounds, we are seeing upward pressure on prices, particularly due to supply bottlenecks in some sectors. These effects have been larger and longer lasting than anticipated, but they will abate.”

Powell had issued a similar warning back in July, revealing that inflation is not “exactly transitory.” Back then, he explained that bottlenecks, massive labor shortages, and other restraints pose barriers to the supply chain adjustment, prompting inflation to become more persistent. 

However, more recently, Treasury Secretary Janet Yellen told CNN Sunday that inflation might not be a permanent problem. She added that improvements are expected “by the middle to end of [2022],” and mentioned that monthly rates of inflation have slightly declined compared to earlier this year.

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Inflation To Drive Bitcoin Toward $100K

Twitter and Square CEO Jack Dorsey has recently warned about rising inflation, claiming hyperinflation is “happening.” “Hyperinflation is going to change everything,” Dorsey tweeted after a report by the Labor Department revealed that consumer prices rose by 0.4% in September.

Billionaire hedge fund manager Paul Tudor Jones had also issued an inflation warning before Dorsey, claiming that crypto offers a strong hedge.

“It would be my preferred one over gold at the moment. Clearly, there’s a place for crypto. Clearly, it’s winning the race against gold at the moment,”

Coincidentally, a report by JP Morgan noted that big players and institutional investors are purchasing Bitcoin to hedge against inflation. The bank said in a note:

“The re-emergence of inflation concerns among investors has renewed interest in the usage of Bitcoin as an inflation hedge. Institutional investors appear to be returning to Bitcoin perhaps seeing it as a better inflation hedge than gold.”

The fact that investors are adopting Bitcoin as a hedge against inflation has convinced some that $100k Bitcoin is “imminent.”

Other traders, like the quantitative analyst PlanB, also predict Bitcoin will hit $100k by the year-end. PlanB has recently tweeted that based on his stock-to-flow (SF2) model, the flagship cryptocurrency might close at or above $100k in December.

Ben Armstrong, founder of the popular Bitcoin-centric Youtube channel BitBoy Crypto, also expects BTC to hit $100k by the year-end. “We’ll probably have one to two pullbacks over a six-week period to get us there [$100k],” he said today.

Do you think Bitcoin will hit $100k by the year-end? Let us know in the comments below.