We have two revisions coming for second-quarter GDP estimates even as time rolls on. The third-quarter is already a month over. GDPNow has its first estimate, a whopping 3.7%. The GDPNow estimate is 1.7 percentage points higher than Nowcast.
GDPNow Latest Forecast: 3.7 Percent — August 4, 2017
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2017 is 3.7 percent on August 4, down from 4.0 percent on August 3. The forecasts of third-quarter real consumer spending growth and real fixed investment growth declined from 3.0 percent and 5.2 percent to 2.8 percent and 4.1 percent, respectively, after this morning’s employment report from the U.S. Bureau of Labor Statistics. The model’s estimate of the dynamic factor for July—normalized to have mean 0 and standard deviation 1 and used to forecast yet-to-be released monthly GDP source data—decreased from 0.64 to 0.27 after the report.
GDPNow Contribution Estimates
Nowcast Latest Forecast: 2.0 Percent — August 4, 2017
Nowcast Week Ending August 4, 2017 Highlights
- The New York Fed Staff Nowcast stands at 2.0% for 2017:Q3.
- News from this week’s data releases had a small positive impact on the nowcast.
- Positive news from the ISM manufacturing report and from labor market data was only partly offset by negative news from consumption and construction data.
Mish Comments
Once again there are wild discrepancies between the forecasts, and once again GDPNow’s initial forecast of 4% is not believable.
For the second quarter, GDPNow’s initial forecast was 4.3% (off by 1.7 percentage points). GDPNow’s final forecast was 2.6%, right on the mark.
The final Nowcast estimate for the second quarter was 2.0%. For the quarter, Nowcast never rose above 3.0%.
What tends to happen is initial forecasts from GDPNow drop over time. The models also tend towards convergence but this is a very large gap to fill.
At the moment, at least one of the models is way wrong.
Mike “Mish” Shedlock
GDP——GROSS DOMESTIC PROPAGANDA—–
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I refer to the process as Grossly Distorted Procedures
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I Like….
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Questions. If the ultimate aim of a society is to optimise the well being of the majority……..
What is well being?
1) Should you bother to measure GDP at all? How would you measure the total well being of a population? What things would you measure?
2) If you set up any agency with a mandate to try to optimise total well being what would you give it control of – tax, rates what? Something else?
3) How would you explain the aims of such an agency in such a way the majority of a population would support it and be prepared to contribute to its aims through their labour and intentions?
I ask because I wonder if time is coming to make some fundamental changes. We might be looking in the wrong place and measuring the wrong things to improve the well being of the population.
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If GDP was 4 percent , wages would be growing since the unemployment rate is already so low.
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“Six-month growth of global real narrow money* continued to strengthen in June, signalling a likely pick-up in economic momentum in late 2017 / early 2018, after a modest near-term slowdown.”
He’s usually on the money.
http://moneymovesmarkets.com/journal/2017/8/3/g7-money-surge-suggesting-too-loose-policies.html
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GDP will putter along till business decides it has accumulated enough inventory.
In May the year over year inventories gain for all manufacturing industries was +2.2%.
For June (latest report) +2.3%.
What damn will break first? automotive?
iirc, GM 104 days of dealer inventory and Ford 77 days at end of July.
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GDP is at best a guess … which faces multiple revisions over months / years. Every July BEA comes out with annual revisions. Remember, these are revisions to numbers that have already faced multiple revisions to initial report.
Last month:
The revisions to the annual estimates typically reflect partly offsetting revisions to the quarters
within the year.
For 2014, the annual rate of change in GDP was revised up 0.3 percentage point for the
first quarter, 0.6 percentage point for the second quarter, and 0.2 percentage point for
the third quarter; these upward revisions were partly offset by a downward revision of
0.3 percentage point for the fourth quarter.
For 2015, upward revisions of 1.2 percentage points for the first quarter and 0.1
percentage point for the second quarter were partly offset by downward revisions of 0.4
percentage point for both the third and fourth quarters.
For 2016, downward revisions of 0.2 percentage point for the first quarter, 0.7
percentage point for the third quarter, and 0.3 percentage point for the fourth quarter
were partly offset by an upward revision of 0.8 percentage point for the second quarter.
https://www.bea.gov/newsreleases/national/gdp/2017/pdf/gdp2q17_adv.pdf
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Off Topic: Miish today’s COT report for gold is an absolute disaster for the second week in a row, meaning gold is going nowhere until the commercials push it way back down again forcing out the hedge funds and large speculators. I understand the overall dynamic of this weekly report yet this has been going on for many years so I really don’t think it’s a free market for many reasons as discussed on your blog several days ago. Even bank traders admit manipulation get caught, pay a fine and keep on kicking ass on both the long and short side making huge trades when the market is most illiquid There are a lot of dangerous things going on in the world right now as worldwide debt continues to spiral out of control makes me wonder how long they can keep this up even with government support as sovereign nations continue to buy the metal at a very artificially low price IMO as measured against stocks, bonds, real estate, interest rates and geopolitical risks? Lastly I don’t think it will be much longer till governments step in and threaten digital currencies. Anonymous
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The TV show Gold Rush Premiered not that long before gold topped out at 1,900. Public interest in gold had ramped up. Gold then went into a multi year bear market. Gold Rush was a sign of a topping market.
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I ask because I wonder if time is coming to make some fundamental changes. We might be looking in the wrong place and measuring the wrong things to improve the well being of the population…
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