In the story summary above, I initially wrote "GDPNow has had a hot hand, but I do not think we get close to 4.5% growth".

I noticed GDPNow had an update due today and it appeared when I hit refresh.

What Happened

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The biggest hit was in Personal Consumption Expenditures (PCE). Today's wage growth was anemic and actual employment fell. I will confirm with Pat Higgins, creator of GDPNow, but I suspect wage growth is the culprit.

Today's factory report (new orders up 1.4% vs a consensus 1.2% gain) seemed reasonable, but it had to underperform the model expection as well.

As is typically the case, the FRBNY Nowcast shows much less volatility to data changes.


FRBNY Nowcast

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Model Comparison

Following the November 1, Nowcast estimated the net impact of ISM and construction at -0.17 percentage points. GDPNow estimated the combined impact at +0.60 percentage points.

That's a wild net difference of 0.77 percentage points in terms of how the models reacted to the November 1 data releases.

Today, Nowcast estimates the net impact of the employment report as +0.07 percentage points. GDPNow knocked a full percentage point off it's forecast today, but I am unsure of the exact contribution from employment.

I will update this post when I have more precise numbers.

Mike "Mish" Shedlock

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