The Atlanta Fed GDPNOw Model for 1st quarter GDP dipped once again today and now sits at 1.2% as of March 9.
Meanwhile, the FRBNY Nowcast Model sits at a robust 3.1%. as of March 3.
The spread is just shy of two full percentage points. One or both of these models are seriously wrong.
In five weeks, the GDP Now Model shed 2.2 percentage points in growth estimates.
GDPNow Evolution
| Date | Detail Item | GDP Estimate |
|---|---|---|
| 30-Jan | Initial nowcast | 2.3 |
| 1-Feb | ISM Manufact., Construct. spending | 3.4 |
| 2-Feb | Light vehicle sales | 3.1 |
| 3-Feb | Employ. Sit., Manuf. (M3), ISM Nonm. | 2.7 |
| 7-Feb | Foreign trade, Mobile homes (Feb 6) | 2.7 |
| 9-Feb | Wholesale trade | 2.7 |
| 10-Feb | Imp./Exp prices; Treasury statement | 2.7 |
| 15-Feb | Retail trade, CPI, Industrial production | 2.2 |
| 16-Feb | Housing starts | 2.4 |
| 22-Feb | Exisiting-home sales | 2.5 |
| 24-Feb | New-home sales/costs | 2.5 |
| 27-Feb | Advance durable manufacturing | 2.5 |
| 1-Mar | GDP/Adv. Econ. Indicators (Feb 28), Personal income/PCE, ISM Manuf., Construction spending | 1.8 |
| 2-Mar | Light vehicle sales | 1.5 |
| 3-Mar | ISM Nonmanufacturing Index | 1.5 |
| 6-Mar | M3 Manufacturing report | 1.3 |
| 7-Mar | International trade | 1.3 |
| 8-Mar | Wholesale trade | 1.2 |
Even if the difference between GDPNow and Nowcast splits down the middle, they will both be about 1 full percentage point off the mark.
However, a Nowcast update comes out tomorrow and I expect it to dip at least a fair amount.
Mike “Mish” Shedlock
which means soaring deficits,2017 will be first year deficits top (officially)2 trillion yoy,hello,and wait for it …3Trillion in 2018,trump will replace bayrack as the official new king of dept,hello
LikeLike
It will be interesting to see what the jobs number is for March. My view is that jobs is a good leading indicator. You have to hire before you can produce more.
I think that the sentiment also is positive. I expect the 1st quarter of 2017 to be as good or better than 4th quarter of 2016 and for 2nd quarter of 2017 to be our first quarter of over 3% GDP growth!
LikeLike
I would like an order of whatever you are smoking and/or drinking. I think it’s the special Trumphoria blend.
LikeLike
John,
I guess it depends what industry you are in. As far as industrial goods and manufacturing, everyone of our customers sees 2017 as an up year. More firm orders and quote backlogs than last year at this time. Most are hiring and increasing investment.
We will see.
LikeLike
Obama was given credit for growth that many times never materialized. Remember the “recovery summer” and “green shoots”? It will be interesting what credit Trump is given for growth given they have continually worked to shoot down any of his claims to success thus far. WE know and understand there is great bias in the media, but more importantly, they are destroying any remaining credibility, if they choose to only serve their sycophant followers.
LikeLike
@mathew-marty — You don’t have to hire to produce more. If you are McDonalds or Burger King or similar, you can now buy a “robot” that cooks food “perfectly” (to the correct temp, not any better tasting) and the robot never takes a break, never goes on vacation, never needs health benefits, and never ever expects a raise or $15/hr… it actually costs more like $11/hr. That is just one example of many, where supposedly well intentioned political meddling will actually destroy jobs.
There is also the problem that government job statistics only count quantity (number of jobs), and ignore quality. If you lose your full time $35/hr manufacturing job and get two part time jobs paying $15/hr … media statistics will say job growth is booming (jobs have doubled!). But your family will say it can’t pay the bills.
No matter how anyone cuts it, the US cannot afford to prop up Washington DC anymore. The debts, the deficit spending, the infestation of bureaucrats that harm economic growth and crowd out real jobs.
Washington DC is the problem, regardless of which idiots are in Congress or the White House.
LikeLike
All you have to do is to sit back relax and totally focus your mind on the words of wisdom from Dick Cheney and your mind thus enlightened will bring you peace.
LikeLike
http://www.zerohedge.com/news/2017-03-09/it-took-4-new-debt-create-1-gdp
Deficits don’t matter because our debt stimulus is working wonderfully.
LikeLike
The Fed is worse than CNN with its fake news.
LikeLike
Crappy growth despite –
“U.S. had 2nd warmest February and 6th warmest winter on record
Unseasonable warmth spanned 39 states; Western drought improved”
http://www.noaa.gov/news/us-had-2nd-warmest-february-and-6th-warmest-winter-on-record
LikeLike
It’s ALWAYS the weather, either too ugly to work or too nice…today is the latter.
LikeLike
Well, needs to be addressed this time of the year.
For many economic numbers Winter is the yearly low point for unadjusted “raw” numbers … and since many are calculated month over month … they need to be “adjusted” to level the playing field … an increase in activity (due to favorable weather) over a period where normally low … the adjustment could / should make the seasonally adjusted number much higher than warranted.
LikeLike
Next week, the US federal government will hit its “debt ceiling”. There are really only two options: (1) admit they have no control over debt levels or spending, and Treasuries are not money good / certificates of confiscation (meaning smart money plus OPEC, China, etc will dump Tsy); or (2) the Feds will have to give up their fantasy world where they can always spend more more more.
Even if the underlying Main Street economy is recovering (I am not sure), the artificial debt steroids that have been propping up GDP are no longer working — in 2016, it took $4 in new debt to “create” $1 in GDP growth!
Main Street has to grow fast enough to compensate for the loss of “debt growth” before it can do much else. If Main Street is growing 3.5% (I doubt it, but lets just say…) but the loss of effective debt growth drags GDP back 2.5% (which is likely) — the net growth rate around 1% (eg Fed Atlanta) could be the right net number.
We have reached peak central planner interference — mostly because debt expansion is no longer effective even if Bernanke-Yellen-Draghi want to continue it.
Is there anyone with a brain cell that still believes a few trillion more JPY debt spending is going to fix things in Japan?
Anyone dumb enough to think more debt spending is going to save the EU or the USA?
Both GDP estimates might be “correct” — but only one of them is factoring in the cost to the economy of the debt binge. The other one is a half truth (aka a lie)
LikeLike
If we can’t even forecast GDP with hard data, tell me why we should believe any of the global warming climate models?
LikeLike