As a result of trade gap and personal spending reports today, the Atlanta Fed GDPNow Estimate for first quarter 2016 declined 0.4 percentage points to 2.1%.

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2016 is 2.1 percent on February 26, down from 2.5 percent on February 25. The forecast for first-quarter real consumer spending growth increased from 3.1 percent to 3.5 percent following this morning’s personal income and outlays release from the U.S Bureau of Economic Analysis (BEA). This was more than offset by a downward revision of the contribution of inventory investment to first-quarter real GDP growth from 0.2 percentage points to -0.4 percentage points after this morning’s GDP release from the BEA.

GDPNow Forecast 2016-02-26

GDPnow 2016-02-26

Factors in Decline

The net effect of the above reports was a 0.4 percentage point drop from the previous estimate.

Today’s GDP report was for the fourth quarter of 2015 and it did not affect the GDPnow model.

Mike “Mish” Shedlock