The gap between the Atlanta Fed GDPNow model and the Federal Reserve Bank of New York staff Nowcast is still wide, however, the models made a huge leap towards convergence this week.

The Nowcast model says third quarter GDP will be 3.0% vs. the GDPNow estimate of 3.6%.

Nowcast rose 0.53 percentage points this week to significantly narrow the gap.

GDPNow Latest forecast: 3.6 percent — August 16, 2016

GDPNow 2016-08-19

“The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2016 is 3.6 percent on August 16, up from 3.5 percent on August 12. After this morning’s new residential construction release from the U.S. Census Bureau, the forecast for third-quarter real residential investment growth increased from 0.4 percent to 2.4 percent.”

FRBNY August 19, 2016 Highlights

  • The FRBNY Staff Nowcast stands at 3.0% for 2016:Q3. [2.96%]
  • Positive news from this week’s data releases pushed the Nowcast up 0.6 percentage point from last week’s number of 2.4%. [Mish comment: actually up 0.53 PP from 2.43%]
  • The largest contributions came from capacity utilization and industrial production data.

Nowcast vs. GDPNow

Nowcast 2016-08-19A

Nowcast Change Detail

Nowcast 2016-08-19B

Industrial production and capacity utilization each added over a quarter percentage point.

The Empire State manufacturing report (to the downside) and housing starts (to the upside) balanced out. Data revisions rounded things slightly lower.

The overall rise was 0.53 percentage points. Report rounding, last week lower, and this week higher, provides a headline rise of 0.6 percentage points.

Mike “Mish” Shedlock