Both the Atlanta Fed GDPNow and the New York Fed Nowcast updated their models today. Let’s take a look at where they stand for second-quarter GDP.
GDPNow Latest forecast: 3.7 percent — May 26, 2017
GDPNow 2nd Quarter Evolution
Nowcast Latest forecast: 2.2 percent — May 26, 2017
Nowcast Highlights
- The New York Fed Staff Nowcast stands at 2.2% for 2017:Q2.
- News from this week’s data releases reduced the nowcast for 2017:Q2 by 0.1 percentage point as the positive impact from wholesale inventories data was more than offset by the negative impact from the advance durable goods report and new home sales data.
Mish Estimate?
I have no estimate yet, other than to suggest GDPNow is way too high and Nowcast is likely high as well.
We do not have 1 month’s worth of data yet, and the construction spending and durable goods reports are notorious for heavy revisions. That said, the first quarter is not off to a rousing start, to say the least.
Second Quarter Reality
- April Durable Goods shipments down 0.3%, new orders down 0.7%: April Durable Goods: Yet Another Weak Second-Quarter Report
- Wholesale Inventories: Down 0.3% in April. March revised lower from 0.2% to 0.1%.Retail Inventories: Down 0.3% in April. March revised lower from 0.5% to 0.3%. For details, please see Fed Eyes Second Quarter Recovery, Expects Trump Fiscal Policy Will Expand Economy
- Trade deficit in April widens by 3.8% with exports down and imports up: Trade Deficit Widens, Exports Weak: Economists Miss the Mark
- Tax Receipts: Federal Tax Receipts Running Below Expectations
- April New Home Sales: New Home Sales Contract 11.4%: Sales Barely Up Year-Over-Year
- April Existing Home Sales: New Home Sales Contract 11.4%: Sales Barely Up Year-Over-Year
- April Existing Home Sales: Spring Housing Flop: Existing Home Sales Decline 2.3 Percent, Inventory Issues Persist
- April Housing Starts: About that Strong April Recovery: Housing Starts and Permits Flop, March Revised Lower
- April Empire State Manufacturing Survey: Empire State Manufacturing Survey Turns Negative: Welcome News?
- April Retail Sales: Sales were at least positive (+0.4%), but they were well under economists projections: Retail Sales Disappoint Again: Department Stores Clobbered in 2017
I fail to see how we can possibly come close to 3.7% growth in the second quarter with those initial reports. GDPNow went totally off the mark with the construction spending revisions.
For a discussion of the construction spending impact, please see First Quarter GDP Second Estimate 1.2 Percent: Mish vs. Consensus and the embedded links on revisions and weather.
Mike “Mish” Shedlock
Is this where I grab my banjo and consult Burt Reynolds? What was the comment, vitamin deficiency? I was just down at the local cafe (yes our village actually has a bar/cafe, a couple of young people bought it and reopened it in hopes of making a living) listening to the latest gossip about the arts and crafts fairs here in the Haute-Marne. seen discretionary income is drying up and jewelry that would once have sold for twenty euros is lucky to bring ten. As one of the artists put it, “I’m working for 5 euros an hour now.” Yep, times are getting harder, one doesn’t need the FED’s GDP guessing game to figure that one out.
Mish, The economy is in the crapper, and everyone knows it. They just wont admitted.
We all know “the economy is in the crapper” … but some of us are under the delusion that zero interest rates, quantitative easing and endless deficit spending is somehow going to produce a different result than it has here, in Japan, and in Europe.
Keep doing the same stupid things, only an insane person (or a con-man like Bernanke) would expect a different outcome
You so right. The overall system is completely breaking down.
Some might say this is off topic, but it is not. GDP is “in the crapper” because we have had no adults running the world. Trump, big hair and all, is the closest we come (I said “closest”, its all relative).
Congratulations to President Trump for telling the wet farts in Europe to stick their global warming taxes where the sun don’t shine.
Touche! You can say that again!
If adults were running the show and did what was needed they’d never get near power again. That’s the problem. The medicine tastes awful, only swallowed when the alternative is even more unpalatable.
My model says the $2500 O’care head tax took all the steam out of the engine.
Meh, the Fed can keep this charade alive for years, even decades, longer. Japan has kept it going there for 30 years.
I agree, but I would say our population is a bit more restive.
“Meh, the Fed can keep this charade alive for years, even decades, longer.”
Not according to the G20 changing the rules for bank depositors. That sort of thing is done in advance of a known crisis, just as the bankruptcy rules were changed by congress in 2005, just before the housing bubble burst.