I seriously fail to understand the GDPNow model in light of actual hard data. Let’s take a look at GDPONow, the actual data, and see if we can come up with a better estimate.
GDPNow Forecast: 2.9 percent — June 16, 2017
GDPNow Second-Quarter Tracking
Despite miserable housing numbers today, with negative revisions to last month, the GDPNow model still has residential investment positive albeit down from the initial estimate.
Starts will continue to add to GDP until they are completed, then consumers fill them with stuff. I fail to come up with residential investment adding to GDP.
Retail Sales
For the second quarter, retail sales are up 0.05 percent per month on average. With two of three months in (one preliminary), retail sales are up a total of 0.1%, roughly 0.6% annualized. GDPNow is looking for a 2.19 percentage point contribution, essentially the same as its initial forecast.
Business Inventories
There is only one month of data on business inventories (April), down 0.2%. Prior to the business inventory report, the Census bureau reported wholesale inventories were down 0.5%. I fail to see why inventories will add 0.76 percentage points. Unless inventories pick up, we are looking at a negative contribution.
I left all the other GDPNow numbers intact, but I have serious doubts about commercial construction as well.
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Except for one industrial production report, economic data has been miserable this entire quarter.
We are not quite halfway through the reports and there may be huge revisions either way. But as it stands, I cannot come up with anything close to 2.9%.
We may be lucky to beat 1.0% the way things are going.
Mike “Mish” Shedlock
Nothing left on the credit card after April 15 Obamacare tax.
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Surprise? Hell no. It’s all about delaying the awakening, the realization that the emperor has no clothes.
Keep on fooling “the market”, let’s make some more quick cash in the big casino named Wall Street.
Kudos, Mish, for highlighting the inconsistencies.
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But there are still two weeks left in the quarter!
Reminds me of the ’73 NL East pennant race when Yogi coined the phrase “It ain’t over ’til it’s over” and Tug McGraw’s rallying cry was “You gotta believe!”
LOL…
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Janet’s just hoping it wll end up like the 1968 world series, detroit loses 1st 3 games to St Louis, and comes back to win the last 4.
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” I fail to come up with residential investment adding to GDP”
…
The only thing I can think of is negative revisions to Q1. GDP calculated Q over Q. Revise down prior and it makes current look better. Every initial new start number for Q1 has been revised down. March number revised downward for 2nd time today.
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The bond market will not be fooled by a stupidly-high 2nd quarter initial estimate if that is the case.
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I can feel it in my bones the final click clacks of the bond yield coaster … this time – I promise – to hold my hands high while screaming …
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http://bit.ly/2sCjXUr
Cook County is doing its best to help.
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Trump said there ‘very good numbers are going to be announced, by the way, in the very near future, as to GDP’ 🙂
Trump said he would never lie to the American people which means we will indeed have very good GDP numbers. Now he didn’t what a good number is, did he?
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Obama said if you like your current doctor, you can keep your doctor (except if your doctor quits because he can’t get paid).
Obama said if you like your current insurance policy, you can keep your policy — except then he made it illegal for insurance companies to sell those policies.
Obama said the average American family would save $3500 per year on health insurance — and instead insurance premiums more than trippled while deductibles nearly trippled.
So I wouldn’t put much faith in Washington DC’s promises if I were you.
PS — read my lips, I did not have sex with my intern, WMDs are a slam dunk, Benghazi was caused by a youtube video, and Obama didn’t illegally spy on Americans while sending the IRS after his political enemies. Oh, and Atty Gen Lynch did not sell out justice to Bill Clinton on an abandoned runway — nor order the Cowardly FBI Director to drop investigations of Hilary’s many many crimes.
And Trump said he would repeal Obamacare first thing.
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It’s just the weather.
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Thanks for your excellent analysis Mish. I appreciate your Micro approach. I tend to favour a Macro approach, and I see nothing that makes me change my prediction for 1-2% US growth for Trumps term, and world growth of 2-3%. Too bad that so little of this growth trickles down to the bottom 80% in most countries.
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I certainly agree. Nothing makes sense. And it won’t until the reporting agency’s start reporting truthful facts and results. I can’t understand why a trump administration wouldn’t have told everybody the truth from day one. I’m starting to think this is all a another game show.
Tim Gaynor
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