In the wake of dismal retail sales, first-quarter GDP forecasts by the Atlanta Fed GDPNow model and the FRBNY Nowcast model ticked lower. Let’s investigate the details and compare the current estimates.
Nowcast Latest Forecast: 2.6 Percent — April 14, 2017
- The FRBNY Staff Nowcast stands at 2.6% for 2017:Q1 and 2.1% for 2017:Q2.
- Incoming data during the week lead to a reduction of the nowcast by 0.2 and 0.5 percentage point for 2017:Q1 and 2017:Q2, respectively.
- The changes in the nowcast were mainly driven by a negative surprise from retail sales.
GDPNow Latest Forecast: 0.5 Percent — April 14, 2017
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 0.5 percent on April 14, down from 0.6 percent on April 7. The forecast for first-quarter real consumer spending growth fell from 0.6 percent to 0.3 percent after this morning’s retail sales report from the U.S. Census Bureau and the Consumer Price Index release from the U.S. Bureau of Labor Statistics.
The impact of this week’s economic forecasts was easy to predict.
On April 12, in Import Prices Decline, Export Prices Rise: Impact on 1st Quarter GDP Estimates? I had this to say: “Effectively, import prices were flat as export prices rose 0.2% for the month. This will add a tick or so to GDP estimates for the first quarter but it will likely be at the expense of negative pressures for the second quarter.”
The GDP Now model did tick up 0.1 percentage points on the import/export data, then declined 0.2 percentage points today on retail trade data.
The GDP downgrade would have been worse had it not been for the CPI running well under consensus at -0.3% for the month.
A week ago, in Six GDP Estimates: ZeroHedge, Mish, GDPNow, Nowcast, ISM, Markit I noted my April 3 prediction of 0.6% while commenting:
The jobs report did not change my estimate.
Next Friday, we have a trifecta of CPI, Retail Sales, and Business Inventories. Those reports can easily combine to move my forecast down to zero or back above one percent.
My guess now is that something on the order of 0.5% is baked in the cake.
Next week we have Industrial Production numbers, Housing Starts, and Existing Home Sales reports. The following week we have New Home Sales, Durable Goods Orders, and International Trade reports.
The International Trade Report is unlikely to impact estimates much. I expect the durable goods report to be weak due to autos and because aircraft orders can’t keep the boat afloat forever.
The numbers most likely to have a big impact on GDP are housing related.
Had it not been for the -0.3% CPI reading today, I would have lowered my first-quarter estimate to 0.3%. As it stands, I will estimate 0.4%.
Weak restaurant sales noted in today’s retail sales report may be ominous. Risks are to the downside.
- Mish April 14: 0.4%
- GDPNow April 14: 0.5%
- FRBNY Nowcast April 14: 2.6%
- ISM April 3: 4.3%
- Markit April 5: 1.7%
The “advance” GDP number for the first quarter comes out on April 28.
If housing data points are bad, and the GDP deflator (inflation) is high, we can easily see a negative print on April 28.
If I am in the ballpark, the Fed will not hike in June.
- Retail Sales Unexpectedly Decline, Revisions Even Worse
- Consumer Prices Unexpectedly Decline, First Drop Since February 2016: Reality Check
- Hard-Boiled vs Soft-Boiled Economic Egg Debate: Cracking the Shells
- Six GDP Estimates: ZeroHedge, Mish, GDPNow, Nowcast, ISM, Markit
- Debate over the Yield Curve: Is it Steepening or Flattening?
- General Merchandise Jobs Down 35,000 in March, Down 89,000 Since October: Is This Big Deal?
- Economists never know what the weather “was” until economic reports come out!
- Another ISM/PMI Divergence: Non-Manufacturing
Mike “Mish” Shedlock
Could always bring in the IMF http://www.keeptalkinggreece.com/2017/04/14/us-supportive-role-for-imf-in-greece-bailout/
And tax the middle class http://www.keeptalkinggreece.com/2017/04/14/greeks-paid-7bn-more-in-taxes-middle-classes-poverty/
‘The US is not Greece’ though….
“None so blind as them that will not see.”
Seville procession witnesses several stampedes, so far seems agit was local coordinated with people shouting for the local snackbar, banging containers, yelling ETA slogans… still not clear ethnic or motive
In France Turkey match saw some upsets also
It goes on…
Still curious about the difference between the FRBNY forecast and the Atlanta Fed forecast. Are we comparing apples and apples (e.g. both real and seasonally adjusted?).
If I recall correctly, the FRBNY has not accounted for the destination of somewhere around 7 trillion dollars either. They must be special or spmething.
which means higher taxes said:
lol and that’s after borrowing …..wait for it 600 billion in the first 6 months,and that’s just the amount they admit too,real deficit is double that (triple),and with the dept ceiling,moar war,soaring red ink,trump in a pickle
Try dodging your share of the bill, everyone pickled one way or another.
Read same on Malaga airport, Gib. border. Saying it is not aimed at Brits. or specific Gib. dispute, but majority delayed are British ( as they are the main extra EU in transit) . Part of frontex new law verifying ID before exit of EU…Spain so disorganised might be part true even.
Wouldn’t trust the Spanish as far as I could kick them.
Corruption abounds, along with a very unpleasant nationalism.
Since the Great Recession retail sales in March have been lower than February 4 out of 9 times: in 2009, 2013, 2016, and now. Year on year retail sales are up $415B in Mar 17 vs. $393B in Mar 16. This looks pretty good to me.
Curious… do you have online vs brick amd motor sales. Heard somewhere that online sales have grown 9% yoy.
Online sales have grown much faster than brick-and-mortar but they still represent about 8% of total retail sales.
Tony Bennett said:
Comparisons are in nominal dollars and no allowance for population growth.
If real dollars + per capita, not so rosy.
Tony Bennett said:
“If housing data points are bad, and the GDP deflator (inflation) is high, we can easily see a negative print on April 28.”
Janet will have to do some SERIOUS ‘splaining.
Read a blurb this week that if Q1 GDP comes in weak (iirc, used +0.5%) it would be the weakest in 30 years for a quarter in which the Federal Reserve raised the overnight rate.
Everything is crashing like a glacier.
As “convenient” as a sarin attack in Syria:
Le Pen Faces Disaster In Election After “Monumental” Computer Error
Despite leading in the polls for Round One, The Express reports that a monumental computer blunder could cost Marine Le Pen the French general election as 500,000 citizens living outside of France have the chance to vote twice.
The election has become extremely close with just 4.5 percentage points separating Macron, Fillon, Mélenchon, and Le Pen…
Which is why this shocking error in election procedures could be the swing to crush Le Pen’s hopes. As The Express reports, half a million people received duplicate polling cards in the post, which would allow them to cast two votes at the first round of the election, held on April 23.
French authorities confirmed they would not be investigating the potential electoral fraud until AFTER the election, when retrospective prosecution may take place.
Many of those duplicates will end up in London, 6th biggest city in France, where Macron has been courting the French.
How convenient. No wonder the authorities are not trusted.
Unable to execute the basics properly other ulterior motives.
Liberal elite may be those abroad too.
Trust no one should be LePen s mantra. Nothing happens by pure accident in geopolitics. Look at lawsuit below as an example of what certain people might be capable of.
So much for all the money that has been thrown at this mess since 2008. It may be time to dust off the term “the new normal” a reference created after the 2008 financial crisis to describe an economy mired in slow growth. The term has not been used much lately but has become the reality we face. Something that should make people concerned is that grinding stagflation is on the horizon.
A strong case can be made that the economy is about to stall under strong headwinds as the burden of past debts and future promises made to those retiring and unable to find good jobs begins to weigh heavily upon society. The article below delves into the idea of slow growth coupled with stagflation.