We have now seen convergence, and then some.
At its maximum, GDPNow was a full percentage point higher than the Nowcast. Now, the GDPNow forecast is slightly below Nowcast.
GDPNow Latest Forecast: 2.1 Percent — October 7, 2016
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2016 is 2.1 percent on October 7, down from 2.2 percent on October 5. The forecast of the contribution of inventory investment to third-quarter real GDP growth fell from 0.28 percentage points to 0.24 percentage points after this morning’s wholesale trade report from the U.S. Census Bureau. The forecast of real government spending growth fell from 0.1 percent to –0.1 percent following this morning’s employment release from the U.S. Bureau of Labor Statistics.
The top to bottom decline in GDPNow went from 3.8% on August 5 to 2.1% on October 7. That’s a decline of 1.7 percentage points.
As of October 7, 2016, here are the Nowcast highlights.
- The FRBNY Staff Nowcast stands at 2.2 % for 2016:Q3 and 1.3 % for 2016:Q4.
- News from this week’s data releases left the nowcast for Q3 virtually unchanged and pushed the nowcast for Q4 up slightly.
- Positive news came from international trade data as well as the manufacturing and non-manufacturing ISM business surveys.
My announced forecast was that third quarter would dip slightly while the fourth quarter would rise slightly.
Third Quarter Nowcast
The FRBNY Nowcast never got quite as exuberant as GDPNow, but as of Friday, Nowcast is higher than GDPNow for the first time in this series.