As expected in this corner, the net effects of economic reports of the week balanced out to much ado about nothing.
The overall result of the week’s reports was a rise in the Atlanta Fed GDPNow model from 2.0% to 2.1%.
Latest forecast: 2.1 percent — October 27, 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 27, up from 2.0 percent on October 19. The forecast of the contribution of net exports to third-quarter real GDP growth increased from -0.15 percentage points to 0.07 percentage points after yesterday’s Advance Economic Indicators release from the U.S. Census Bureau. This was partly offset by a decline in the forecast of the contribution of inventory investment to third-quarter real GDP growth from 0.23 percentage points to 0.03 percentage points after the Census Bureau’s Advance Economic Indicators release and its advance durable manufacturing report this morning.
Gaming the Reports
Yesterday, in US Trade Deficit Sinks 5.2%; Gaming the GDP Effect; Food for Thought, I estimated the advance trade report would add 0.1 to 0.2 percentage points to third quarter estimates.
The actual effect on the GDPNow model was +0.22 percentage points. The overall net effect from yesterday (new home sales and the three advance reports was no change).
Existing home sales added 0.1 percentage points to the estimate on October 20. Since then, positives and negatives balanced out.
Yesterday’s new home sales report was not the negative factor I expected. Instead, inventory counterbalanced the +0.22 from the advance trade report. Today’s durable goods report had little if any effect.
Mike “Mish” Shedlock