The Atlanta Fed updated its GDPNow forecast following today’s housing and CPI reports.

The Atlanta Fed model says 2.5%, the New York Fed Nowcast Model says 1.2%. The New York Fed updates its Model on Friday.

Latest forecast: 2.5 percent — May 17, 2016

GDPNow 2016-05-17

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2016 is 2.5 percent on May 17, down from 2.8 percent on May 13. The second-quarter forecast for real residential investment growth declined from 5.3 to 2.5 percent after this morning’s housing starts release from the U.S. Census Bureau, the forecast for real consumer spending growth ticked down from 3.7 percent to 3.6 percent after this morning’s Consumer Price Index release from the U.S. Bureau of Labor Statistics, and the forecast for the contribution of inventory investment to second-quarter growth declined from -0.24 percentage points to -0.39 percentage points after this morning’s industrial production release from the Federal Reserve. The latter decline was concentrated in motor vehicle and parts dealers’ inventories.

Once again, I find estimating which way this report will go following economic reports very difficult.

Housing Starts Rose 6.6 Percent yet, “real residential investment growth declined from 5.3 to 2.5 percent” following the report.

In light of the CPI increase of 0.4% month-over-month, real consumer spending growth ticked down as one might have expected, but perhaps not as much as one would have expected.

It will be interesting to see which way Friday’s NY Fed Nowcast goes. CPI will be a drag. What about housing?

Mike “Mish” Shedlock