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