The FRBNY Nowcast for 4th quarter GDP dipped slightly today on account of the wholesale inventory report earlier this week.
Nowcast Highlights: December 30, 2016
- The FRBNY Staff Nowcast stands at 1.8% for 2016:Q4 and 1.7% for 2017:Q1.
- This week’s only news was from wholesale inventories, which had a small negative impact on both the Q4 and Q1 Nowcast.
Nowcast 4th Quarter 2016
Nowcast 4th Quarter 2016 Detail
Note that wholesale inventories rose nearly a full percentage point.
Econoday commented …
Wholesale inventories jumped a preliminary 0.9 percent in November following an upward revised 0.1 percent decline in October. Retail inventories also jumped, up 1.0 percent in November following an unrevised 0.4 percent decline in October. The build in wholesale inventories is split evenly between durable and nondurable goods with the build on the retail side concentrated in vehicles. The increases in this report are a surprise and, though a positive for the fourth-quarter GDP calculation and an offset to this morning’s widening in the goods trade gap, will revive talk of unwanted inventories.
That would have been my expectation as well. However, wholesale inventories have a negative contribution to the Nowcast model.
With the Nowcast of 1.8% for 2016 Q4 and 1.7% for 2017 Q1, expectations of three rate hikes in 2017 looks dubious at best.
Related Article: Wholesale and Retail Inventories Rise.
Mike “Mish” Shedlock
Treasury yield curve flattening slowly day by day signals this is a POLICY ERROR.
Treasury market is saying either they will not tighten three times in 2017 – or if they do, these increases will be VERY quickly reversed.
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Nope, the Treasury market is saying no such thing.
First, Janet Yellen is not a market. She is a market manipulator.
Second, on a holiday week with pencil thin trading volume — even the pretense of an imaginary market is on vacation.
Third, the media predicted Trump would never survive the raw machismo that was Rubio or Cruz — never mind awesome corruption that is Hillary. They were absolutely, positively, no doubt in their minds, certain of it.
Now these same windbags are equally certain of what a Trump administration means for bond yields….
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Federal Reserve magic eightball says…. “ASK AGAIN LATER”
Fed economists have predicted 20 of the last 3 recoveries (three is less than twenty — that is not a typo) — and they have never once predicted a recession.
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I think the FED will raise rates going forward, and thereby confound the crowd by doing what they say. Early Trump rate increases send a political signal. It is all politics. Economics is just the excuse.
Strangely enough rate increases will align the FED more with Trump against the War Party/Welfare Entitlements Congress which is a No Limits Spending cesspool. Of course, the FED also needs room to cut again without going negative and banning cash, the totalitarian alternative preference of the Obama Marxist Socialist crowd.
Trump has a different plan for infrastructure spending; less USA.gov outlays than is the norm, matching outlays, incentives (tax, regulatory). That should be obvious from the election campaign: Trump spent just over $100 million of his own money to win, versus Hillary’s spending over $1 billion to lose. 10:1 ratio. Trump will get more for each USA.gov dollar spent.
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Joel I agree when it comes to Trump money he spent was lower, but he subscribes to MMT and deficits do not matter. I say this my the statements he has made and I could be wrong. I think deficits do not matter to Trump. I am going to take a wait and see approach. I like his statements on MIC prices and screwing the taxpayer. Mainly the Air Force and the Navy spend stupid amount of money for planes and ships, the Army and Marines get the scraps. This is clearly demonstrated time and time again when we deploy ground forces but that is another discussion.
I think the Fed will do as they dam well please, until Trump puts a stop to it if he can influence the fed. The Fed has posted rate hike in the past including the months and the proposed hike only to not do them. A good strategy for the Trump administration is to actually post the truth about the economy and unemployment. This would go along way in proving Obama was seriously cooking the numbers. Alas I do not think it will happen but it would expose his lies. I think Donald will go on business as usual with the exception of throwing the working class some scraps. I think and I hope I am wrong he will state he was going to do this or that but could not do it because of the Dems resistance. It cannot get passed and well you know what I mean.
I can remember when the American people elected President Obama on his slogan of Hope and Change. What happened is we did not see any hope and only have change in our pockets now as he took over one sixth of the economy with the healthcare law. Transparency quite honestly was the big lie!!!!
I am cynical on how Trump will deliver on his promises.
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