The large divergence between the Atlanta Fed GDPNow forecast and the New York Fed Nowcast remains.
The former upped its forecast today from 3.2% to 3.5% while the Nowcast remains at 2.8% from a week ago.
In addition, the initial Nowcast for 4th quarter is a not so robust 2.0%.
Nowcast September 2, 2016 Highlights
- The FRBNY Staff Nowcast stands at 2.8% for 2016:Q3, unchanged from last week.
- The Nowcast for 2016:Q4 is around 2%.
- News from this week’s data releases provided mixed signals. The largest negative contributions came from a lower than expected ISM manufacturing release and lower than expected imports. Positive contributions came from higher than expected consumer spending and exports.
3rd Quarter Nowcast vs GDPNow
GDPNow updates far more frequently, but has not started to project 4th quarter. I did not place all the data points for GDPNow.
Nowcast 3rd Quarter Detail
Nowcast 4th Quarter Forecast
3rd Quarter Forecasts
- GDPNow: 3.5% (See GDPNow Forecast Bounces Back to 3.5%)
- FRBNY Nowcast: 2.8%
- Markit: 1% (See Markit Chief Economist Estimates 3rd Quarter GDP at “Just Under 1.0 Percent”)
For the sake of argument let’s assume the FRBNY forecasts are accurate. The last five quarters would look like this.
- 4th Quarter 2015: 0.9%
- 1st Quarter 2016: 0.8%
- 2nd Quarter 2016: 1.1%
- 3rd Quarter 2016: 2.8%
- 4th Quarter 2016: 1.7%
Does that look like hike material?
Just so no one gets me wrong. I am not suggesting the Fed shouldn’t hike.
Rather, I am suggesting there should not be a Fed at all. The market should set rates. If it did, we would not be in this mess.
Mike “Mish” Shedlock