Despite poor but not horrendous economic reports today, the Atlanta Fed GDPNow model forecast for first quarter GDP ticked up slightly today, from 2.4% to 2.5%.

gdpnow-2017-02-28

Latest forecast: 2.5 percent — February 27, 2017

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 2.5 percent on February 27, up from 2.4 percent on February 16. The forecast for first-quarter real residential investment growth increased from 7.8 percent to 10.8 percent after the housing data releases last week from the National Association of Realtors and the U.S. Census Bureau.

GDP Comments

In regards to the trade deficit report this morning, Econoday commented: “This report will be bringing down early first-quarter GDP estimates.” A reader also commented on the same thing.

I replied to the reader “I agree but the effect is likely not as big effect as you might think. It takes big numbers just to move things s a couple ticks. Even then, it depends on the model. It may have already been anticipated even if economists did not see it.”

That’s what happened.

Economic Reports and Effects on GDPNow

gdpnow-2017-02-28a

Today’s balance of trade report did not move GDPNow even one tick. I have followed these reports for a long time and unless something is really wild in the trade report, the models barely budge.

However, I will take a shot that the New York Fed Nowcast does move one or two ticks to the downside following the report.

Trump Howling 

One thing we can expect from today’s reports is for Trump and his economic advisors led by Peter Navarro, to step up the “unfair” trade charges.

Exports look anemic, especially capital goods exports.

For further discussion, please see:

  1. Trade Deficit Unexpectedly Widens: Exports Sink, Imports Up Sharply.
  2. GDP Unexpectedly Undershoots Consensus: What’s Ahead?

Mike “Mish” Shedlock