Today, the Atlanta Fed released it’s 2nd quarter GDPNow Estimate.
However, today’s Personal Income and Expenditures report was for March, a first quarter GDP Item. Spending was very weak.
I asked Patrick Higgins, the GDPNow creator, how today’s report would have affected the GDPNowcast for first quarter.
His answer was inconclusive …
It’s hard to say since this is the first forecast for Q2. It is the case the growth rate for March real PCE growth was about a percentage point lower (annualized) than the model was projecting when making the forecast for Q1 growth. But it’s also true that there was an upward revision to February’s growth rate for real PCE growth. Q1 real PCE growth was 1.86%, about in line with the GDPNow forecast [1.92%].
The above table shows the effect Higgins mentioned.
Real PCE for January was revised from +0.2% to +0.3%.
However note the first three months this year: 0.0% January, 0.3% February, and 0.0% March.
Compare those Real PCE numbers to the previous quarter: 0.1% October, 0.3% November, and 0.2% December.
The slowdown in personal spending is very noticeable, roughly half the previous quarter.
Also note the very unusual decline in Real services expenditures. The economy is sliding very fast if the decline in services holds.
- Personal Spending Weak Despite Solid Wage Gains, Autos Disappoint Again, Services Shockingly Weak
- GDPNow 2nd Quarter Estimate at 1.8%; NY Fed Nowcast 0.8%; Blue Chip 2.3%
Mike “Mish” Shedlock