In the wake of today’s durable goods report and last week’s housing reports the Atlanta Fed GDPNow Model for third quarter GDP ticked down 0.1 percentage points to 2.8%.

Latest forecast: 2.8 percent — September 28, 2016

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2016 is 2.8 percent on September 28, down from 2.9 percent on September 20. The forecast of third-quarter real equipment investment growth fell from 1.5 percent to 0.8 percent after this morning’s advance durable manufacturing report from the U.S. Census Bureau. The forecast of third-quarter real investment residential growth, which now stands at –8.9 percent, declined by 1.3 percentage points on both September 22 and September 26 following the release of housing data on those dates.

gdpnow-2016-09-28

Looking Ahead

On Thursday the Census bureau posts an advance report on trade. On Friday, the Personal Income and Outlays report will highlight consumer spending.

Both GDPNow and the FRBNY update their models on Friday. The latest FRBNY Nowcast for 3rd quarter GDP was 2.26%.

Unless this week’s spending and trade reports are good, especially consumer spending, the FRBNY estimate could easily dip below 2%.

Related Articles

  1. Factory Orders Flat, July Revised 0.8% lower
  2. New Home Sales Decline 7.6%, Median Price Down 3.1%: “Very Positive” Says Econoday
  3. Existing Home Sales Sink Second Month: NAR, Economists Surprised
  4. GDP Estimates in Free-Fall: FRBNY Nowcast 2.26% for 3rd Quarter, 1.22% for 4th Quarter

Articles 1-3 above are not reflected in the most recent Nowcast. As it stands right now, I am guessing that their guess will be 2.0% to 2.1%.

It will not take much of a push to see a sub-2% reading. A poor spending report could result in an estimate of 1.8%. It will take a decent spending report just to hold things flat.

Mike “Mish” Shedlock