On Friday, both the Atlanta Fed and New York Fed updated their GDP 2nd quarter forecasts. The FRBNY Nowcast remained at 1.9% while GDPNow dipped to 2.7% narrowing a once gigantic spread to 0.8 percentage points.
GDPNow Latest forecast: 2.7 percent — June 30, 2017
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2017 is 2.7 percent on June 30, down from 2.9 percent on June 26. The forecast of the contribution of net exports to second-quarter real GDP growth fell from –0.34 percentage points to –0.51 percentage points after Wednesday’s advance release on inventories and international trade in goods from the U.S. Census Bureau.
Nowcast Latest forecast: 1.9 percent — June 30, 2017
- The New York Fed Staff Nowcast stands at 1.9% for 2017:Q2 and 1.6% for 2017:Q3.
- The effect of news from this week’s data releases was small, leaving the nowcast for both quarters broadly unchanged.
Once again, the Nowcast barely budges on most data but GDPnow swings wildly. This could work either way in theory.
GDPNow forecasts more often so there is more potential for lots of ups and downs. However, by reporting only once a week, if data balances out (some positive and some negative impacts), the Nowcasts could be less volatile.
But the opposite is also possible. If the results are additive, Nowcast could also move more.
In practice, if one looks at the total adjustments in the preceding chart, Nowcast did not budge on anything but GDPNow did.
Nowcast Third Quarter
Mish Second Quarter Forecast Update
Following two reasonably good housing reports and no more absolute disasters, I am near 1% GDP for the quarter with inventory a huge wildcard. I have no idea how the BEA is going to value all the new and used cars sitting unsold on dealer lots.
60-65% of the data is in for the quarter, but revisions are common. In contrast to the past few reports, I have little confidence in any of the estimates.
That said, the economy is barely plodding along. The Nowcast for third quarter provides additional evidence.
Mike “Mish” Shedlock
What’s ahead is credit defaults and a significant contraction of the money supply. Significant repercussions will be felt in China where 100 million surplus migrant laborers move from location to location building empty cities. Those boys all have cell phones and when they get hungry they make a good size flash mob. It won’t help when President Trump repatriates manufacturing, corporate profits, and blackballs the Chinese banking industry.
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trump like Obama will not allow negative gdp print,meaning massive on a farcical scale manipulation to keep it in the black ie drug trafficking will for the first time ever will be largest driver of growth,that’s right the massive opioid epidemic is now the biggest contributor behind war and gov’t to growth
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The essence of keynesian economic policy, just like the essence of all socialism, is to rob the future to pay for the past.
When time passes and you get to the future, you find (to borrow from Lady Thatcher) that you have run out of other people’s money.
The USA elected a ghetto president who racked up $10 trillion in on-balance sheet debt, plus another $1 trillion in unpayable student loans (subsidies to teacher unions), plus another trillion or so in subsidies to Govt Motors and GE and Boeing (more buying union votes by whatever label). And that doesn’t consider the $40-50 trillion in off-balance sheet debt (in present value terms) for the cost of Obamacare (that means the PV costs are double what GDP is reported to be).
Yet there are still voters who think Obama was anything other than a ghetto con-man. How much “talent” does it take to promise the world and leave others with the bill?
California, Illinois, Maine and Connecticut are just the first four states to reach a debtor cashflow problem. The keynesian welfare state is collapsing. All four states are run by democrat governors and democrat legislatures; this is not a coincidence. Buying welfare votes and buying public union votes has a steep price — and the bills for yesterday’s empty promises are coming due.
Obama made $50-60 trillion in empty promises — roughly 3x GDP in one presidency — which means the count down for Uncle Sam not being able to pay Obama’s bills has started. Chicago style economics work the same in Chicago as they do in Venezuela and Washington DC (and Sacramento, Augusta, Hartford, Athens Greece, etc, etc, etc).
Socialism causes economic misery, and this time will not be different.
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And yet Medex, you try and explain that to the liberal whack jobs and they always come back with Reagan tripling the debt and it is his debt plus all the interest accrued that is responsible for three fourths of our debt today. They are absolute morons.
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Borrowing to build something (or rebuild a military decimated by Vietnam after effects) is not the same as borrowing to fund consumption.
Some of Reagan’s later deficits (his 2nd term) were rather counter-productive. Being able to defend yourself is a good thing — being a global policeman is not. Ending the cold war was unequivocally a good thing, even if you are a libtard (perhaps not so good for California, which gets most of its true wealth from military spending, ahem).
Obama’s debts were 100% consumption today (during his term), someone else can worry about paying for it later. No investment in the future, banks still a mess (despite bailouts), financial markets still a mess (despite bailouts), health system went from messed up to disaster, middle east went from really bad to epic fail, Obama’s pivot to Asia mostly didn’t happen except the part of upsetting Asia. There are more people on food stamps than when Obama took office (despite economic “recovery”). Racism is far worse today than when Obama took office.
Reagan ended the cold war, and made some all too human mistakes. Obama just p!ssed $60 trillion into the wind while making a lot of things worse.
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You keep focusing on the wrong things because your political ideology blinds you. Obama was just as bad as the presidents who preceeded him. Trump will be just as bad as Obama. And so will your next president.
America is destined for slow economic growth and continued growth in debt for many reasons (not listed in order of importance):
– Military spending- the US has spent many trillions killing innocent people all over the world, and then is surprised when some of these people become terrorists and fight back
– Political system- Democrats are the party of tax and spend; Republicans are the party of borrow and spend; you’re constantly running elections (every two years or less) and all politicians have to promise things that you can’t afford in order to get elected (and the voters keep falling for it)
– Crony Capitalism – it doesn’t matter which political party is In power; they both get bought off by the lobbyists; the top few % ensure that whatever economic growth America has, will go to those at the top; the bottom 90% have no leverage
– Policy – Trump is pursuing policies that appeal to his political base, but do not promote economic growth; trade disputes, sabre rattling, restrict immigration, build a wall, and most importantly – uncertainty about what he will say or do next
Sadly, America is not the only country that is in this type of mess. It just happens to be the largest and most important country that is in this mess. And I know that many of you will interpret my remarks as being anti American. I apologize to all of you. I am not anti American. I see America as a great country. A country that has accomplished so much that is positive, for itself and for the world. The reality is that I want America to “be great again”. But I don’t see anything on the horizon that is going to change.
I was thinking that with Trump and the Republicans in power that perhaps they could achieve 2% GDP growth, but seeing how ineffective they are, I will lower my expectations to the bottom end of my 1-2% range.
I am not expecting any kind of economic catastrophe in the near future, barring some type of black Swan event. Just continued slow growth, most of which benefits the few at the top.
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None of the things you whine about from abroad are new, and if you were American you would know that.
Obama spending like a ghetto con-man is new. He added more debt than any other President, and he has ziltch to show for it. He set racial relations back decades. And he tried to force socialism on a country that simply does not want it.
Obama was popular abroad, especially in Europe, because he is more European than he is American. Obama likes socialism, just like continental Europe. He is constantly whining about and trying to rectify past wrongs by sanctioning people who weren’t even born when the wrongs occurred — just like Europe. Obama is European, not American.
Maybe stick to commenting on your own hole in the wall since your knowledge of the US is pretty thin
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An article by the economist, Joseph E. Stiglitz appeared on Project Syndicate contained the statement, “The only way Trump will square his promises of higher infrastructure and defense spending with large tax cuts and deficit reduction is a heavy dose of what used to be called voodoo economics. Decades of “cutting the fat” in government has left little to cut: federal government employment as a percentage of the population is lower today than it was in the era of small government under President Ronald Reagan some 30 years ago.”
I contend this is very misleading and only by bending statistics such as the total number of employees on the government’s payroll can such a statement be made. Government has expanded into every facet of our lives. He is merely repeating a myth generated over decades. The article below argues Government is much bigger today!
http://brucewilds.blogspot.com/2017/01/the-myth-that-government-has-controlled.html
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Reblogged this on World4Justice : NOW! Lobby Forum..
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