The volatility of GDPNow vs Nowcast is once again on display in recent weeks. Whereas Nowcast barely moves week to week, a chart of GDPNow shows significantly more volatility.
GDPNow forecast: 2.5 percent — October 6, 2017
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2017 is 2.5 percent on October 6, down from 2.8 percent on October 5. The forecasts of third-quarter real consumer spending growth and third-quarter real private fixed investment growth declined from 2.5 percent and 1.8 percent, respectively, to 2.2 percent and 0.9 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 September—normalized to have mean 0 and standard deviation 1 and used to forecast the yet-to-be released monthly GDP source data—fell from 1.53 to 0.18 after the report.
Nowcast forecast: 1.5 percent — October 6, 2017
Week Ending October 6, 2017: Highlights
- The New York Fed Staff Nowcast stands at 1.5% for 2017:Q3 and 2.5% for 2017:Q4.
- News from this week’s data releases left the nowcast for Q3 broadly unchanged and increased the nowcast for Q4 by 0.5 percentage point.
- Positive surprises from the ISM surveys outweighed negative surprises from employment data.
The charts show a huge reaction to the hurricane on Nowcast but GDPNow had been generally sinking since its initial forecast for the quarter.
Then, in response to construction, autos, and ISM GDPNow jumped far more than Nowcast.
Once again there is a full percentage point gap between the estimates. Mid-week the gap was about 1.3 percentage points.
Hurricane impacts, especially change in private inventories (CIPI) destruction due to flooding on top of wildly changing construction reports makes GDP estimates for third quarter very difficult.
Mike “Mish” Shedlock
Wholesale inventories out today (August) … up a healthy +0.9% month over month.
As long as business continues to feel comfortable building … and holding …. inventory, GDP should keep its neck above water.
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Mish my son in law thinks we’ll grow just fast enough to keep interest rates from going up too much and that before we have a melt down we’re going to have a melt up that’s already started. Then ever so often he asks me what I think I is going to happen next, so that he does exactly the opposite believing me to b a perfect contrary indicator.
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Businesses are in pretty good shape. Growth should continue at 1-2% for several years. Interest rates and inflation should remain low as well, though rising slightly over time.
Not much doom or gloom barring a black swan event.
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trump wants at least 3% gpd print so bean counters will have to “adjust” the numbers higher,just like Obama would not allow negative growth numbers (ever)the “numbers” were “adjusted” to keep economic numbers in the black (barely),trump obviously runnin the same plays
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