The ISM came out with a rosy assessment of the economy today, noting 17 out of the 18 industries reported growth in March. New orders were up in 18 out of 18.

Color me truly skeptical because the ISM and Fed regional reports have been overly optimistic for some time vs. actual hard data.

Nonetheless, GDPNow bumped its forecast for 1st quarter GDP from 0.9% to 1.2% based on the ISM report.

ISM at a Glance

New orders are rapidly expanding, inventories are shrinking, and production is up. Price pressures hit a new upside high.

GDPNow Latest Forecast: 1.2 Percent — April 3, 2017

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 1.2 percent on April 3, up from 0.9 percent on March 31. The forecasts for first-quarter real consumer spending growth and real nonresidential equipment investment growth increased from 0.8 percent and 7.4 percent to 1.2 percent and 9.0 percent, respectively, after this morning’s Manufacturing ISM Report On Business from the Institute for Supply Management.

How Come?

Some of these diffusion reports have gone haywire. Actual factory output does not match these reports.

I believe GDPNow made a mistake in bumping up its GDP forecast. On Friday we find out if Nowcast did the same.

Mike “Mish” Shedlock