The last FRNBY Nowcast report was on June 3.
It’s been two weeks since the last report. Why the delay? The answer is last Friday was caught in a blackout period before the FOMC meeting this week.
In contrast to the Atlanta Fed GDPNow Model, the Nowcast model declined since the last estimate.
Please consider the June 17 FRNBY Nowcast Report.
- The FRBNY Staff Nowcast is slightly above 2% for both 2016:Q2 and 2016:Q3, having declined slightly over the past week.
- This week’s news had an overall negative effect on the nowcast.
- The largest negative contributions came from manufacturing data, only partly offset by positive news from retail sales and housing data.
Second Quarter Nowcast Estimate
Nowcast Running Detail for One Month
Third Quarter Nowcast Estimate
These are not strong reports. And they don’t portend rate hikes, or a strengthening economy, but they are not recession-looking yet.
Four GDP Estimates
- New York Fed Nowcast June 17: 2.1%
- Atlanta Fed GDPNow June 17: 2.8% GDPNow June 17
- Markit June 3: 0.7% to 0.8% Composite PMI Flirts With Contraction; Markit Chief Economist Estimates GDP 0.7-0.8%
- ISM June 3: 1.6% Non-Manufacturing ISM Much Weaker Than Expected
I did hear back from a senior economist with the New York Fed regarding backtesting: “The FRNBY nowcast has been back-tested for more than ten years. We also rely on extensive and growing research and experience on nowcasting that documented the reliability of the approach in real time for other samples (including the 90s) and for many countries.”
I gave my reasons why I think JOLTS and Unemployment data should have subtracted from GDP estimates on June 3 in New York Fed Nowcast Up to 2.4% (I’ll Take “The Under”); Modeling Error on Unemployment Rate?
For a discussion of the Nowcast and GDPNow models, please see Conversations with New York and Atlanta Fed Senior Economists on Their GDP Models.
Finally, at turning points I reiterate both of these models are likely to be far off because of revisions. For discussion, please see the preceding link. Also note US GDP Revisions for 11 Years Coming Up: How Big Will They Be?
Mike “Mish” Shedlock