The Atlanta Fed GDPNow model forecast for 4th quarter GDP remains at 2.9% unchanged from January 6.

The FRBNY Nowcast model for 4th quarter GDP rose 0.1 percentage points to 1.9% due to parameter revisions. The 1st quarter 2017 Nowcast model rose 0.2 percentage points also due to parameter revisions.

The discrepancy between the the two estimates is a full percentage point. Both reports came out today.

GDPNow 4th Quarter forecast: 2.9 percent

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2016 is 2.9 percent on January 6, unchanged from January 3. The forecasts of fourth-quarter real net exports and real inventory investment increased slightly after this morning’s economic releases. These increases were offset by slight declines in the forecasted real growth rates of consumer spending, private fixed investment, and state and local government spending after the same releases.


FRBNY Nowcast Highlights January 6, 2017

  • The FRBNY Staff Nowcast stands at 1.9% for 2016:Q4 and 2.0% for 2017:Q1.
  • News from this week’s releases had a limited positive impact on the 2016:Q4 nowcast; this increase was largely due to parameter revisions.
  • The 2017:Q1 nowcast moved up 0.3 percentage point; this increase was mainly due to positive surprises from parameter revisions and ISM survey data.

The first bullet point seems wrong. Detail shows 2017:Q1 at 1.94% and typically reporting is to the nearest .01 percentage point. Second chart below explain further.

FRBNY 4th Quarter 2016 Nowcast


FRBNY 1st Quarter 2017 Nowcast


Parameter Revisions

  1. Parameter revisions accounted for .16 percentage points of the .12 percentage point rise for the 4th quarter estimate. (more than all of it).
  2. Parameter revisions accounted for .23 percentage points of the .24 percentage point rise for the 1st quarter estimate. (nearly all of it).
  3. ISM added .20 percentage points for 1st quarter but ADP and the Jobs report took that away. The overall report was led by parameter revisions, not data.

I don’t object to parameter revisions. Rather, I explain what happened and why.

The basic idea from Econoday was that data pointed to higher GDP estimates. That notion was false in both the GDPNow and Nowcast reports.

Mike “Mish” Shedlock