The Atlanta Fed GDPNow Model estimate for fourth quarter GDP surged to 3.1% from 2.1% on the basis of strong auto sales.
The latest FRBNY Nowcast for fourth quarter stands at 1.4% but it has not been updated since October 21. I expect a Nowcast update later this morning.
GDPNow 4th Quarter Forecast: 3.1 percent — November 4, 2016
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2016 is 3.1 percent on November 4, up from 2.3 percent on November 1. The forecasts for fourth-quarter real consumer spending growth and real equipment investment growth increased from 2.1 percent to 2.6 percent and 2.7 percent to 5.9 percent, respectively, after Wednesday’s motor vehicle sales release from the U.S. Bureau of Economic Analysis. The forecast of the contribution of net exports to fourth-quarter real GDP growth inched up from -0.01 percentage points to 0.05 percentage points after this morning’s international trade report from the U.S. Census Bureau.
Once again I will take the under as I do whenever GDPNow spikes.
At the beginning of the third quarter, GDPNow was a nearly a percentage point too high and also nearly a percentage point above the initial FRBNY Nowcast.
Later this morning we should have a Nowcast estimate.
Auto sales are counted when cars are shipped to dealers, not when consumers actually buy them. So it remains to be seen if that auto strength is real or not.
Mike “Mish” Shedlock
It will be interesting to see how households spend remainder of Q4 (and beyond) now that everyone knows what their 2017 health insurance premiums will be.
The Hillary Surprise Factor
This is already being reported on by the alternative media. The spike in auto sales is real, but it is not consumer driven. Rather, it is a year-end spike in government fleet sales. GM has already acknowledged that this is the case (they reported a huge increase in inventory for government fleet purchases).
A few months from now expect to see a slew of news stories about how spending by the Federal Government boosted the economy and the GDP in the third quarter or swhould I say prior to the election. Economy pumping is not uncommon before an election and it is important we factor in its influence when attempting to determine the true strength of the economy. the article below explores this practice.
http://brucewilds.blogspot.com/2016/10/government-spending-is-boosting-growth.html
Do I hear 3.2? 3.2 hahmanahahmana 3.2 to the lady in the second row….do I have 3.3? It’s a beautiful nation folks, only 240 years old – in the prime of its life …….do I hear 3.4?…..going once……going twice…….
I am now seeing rebates and incentives on trucks across the board. That is a clear sign that dealer inventories are exploding. Good call Mish.
Mish – from Chuck Butler, The Daily Pfenning, re auto repoâs:
âThe Financial Times recently pointed out auto repossessions in the U.S. are soaring and, with the exception of the “great recession” in 2008 and 2009, stand at the highest levels recorded in 20 years. Uh-0h! Remember when I kept telling you that the loans on new cars were ridiculously long and tons of subprime car loans were being done? Well, just like the housing bubble was fueled with subprime loans, so too, apparently was the car sales bubble. Repossessions in the U.S. hit 1.6 Million in 2015, the third highest level on record for data going back 20 years, and that number is predicted to rise to 1.7 Million this year.â
Gross sales – repoâs = Net sales? Would like to see where the auto makers are reporting ânet salesâ.
Barry Rose, CBF
Credit Manager
Diamond Plastics Corporation
T: 308-385-4329
F: 308-385-4390
âThe American Republic will endure until the day Congress discovers that it can bribe the public with the publicâs money.â ~ Alexis de Tocqueville
“Do not subtract the reported Birth-Death number from the reported headline number”?? Hmm the raw BLS data and the household survey both agreed that there was a LOSS of about 40,000 jobs – that’s good enough for me. Of course the BLS had to add in their dodgy Birth-Death adjustment of +200,000 jobs to get to the more palatable headline figure of a +160,000 increase. It’s more a question of “Do not ADD the contrived Birth-Death number”
I have explained why many times.
Look it up
Subtracting or adding birth death numbers to other reported numbers is just plain wrong