by Mish

GDPNow 2nd Quarter Evolution

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Nowcast Latest forecast: 2.2 percent — May 26, 2017

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Nowcast Highlights

  • The New York Fed Staff Nowcast stands at 2.2% for 2017:Q2.
  • News from this week’s data releases reduced the nowcast for 2017:Q2 by 0.1 percentage point as the positive impact from wholesale inventories data was more than offset by the negative impact from the advance durable goods report and new home sales data.

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Mish Estimate?

I have no estimate yet, other than to suggest GDPNow is way too high and Nowcast is likely high as well.

We do not have 1 month’s worth of data yet, and the construction spending and durable goods reports are notorious for heavy revisions. That said, the first quarter is not off to a rousing start, to say the least.

Second Quarter Reality

  1. April Durable Goods shipments down 0.3%, new orders down 0.7%: April Durable Goods: Yet Another Weak Second-Quarter Report
  2. Wholesale Inventories: Down 0.3% in April. March revised lower from 0.2% to 0.1%.Retail Inventories: Down 0.3% in April. March revised lower from 0.5% to 0.3%. For details, please see Fed Eyes Second Quarter Recovery, Expects Trump Fiscal Policy Will Expand Economy
  3. Trade deficit in April widens by 3.8% with exports down and imports up: Trade Deficit Widens, Exports Weak: Economists Miss the Mark
  4. Tax Receipts: Federal Tax Receipts Running Below Expectations
  5. April New Home Sales: New Home Sales Contract 11.4%: Sales Barely Up Year-Over-Year
  6. April Existing Home Sales: New Home Sales Contract 11.4%: Sales Barely Up Year-Over-Year
  7. April Existing Home Sales: Spring Housing Flop: Existing Home Sales Decline 2.3 Percent, Inventory Issues Persist
  8. April Housing Starts: About that Strong April Recovery: Housing Starts and Permits Flop, March Revised Lower
  9. April Empire State Manufacturing Survey: Empire State Manufacturing Survey Turns Negative: Welcome News?
  10. April Retail Sales: Sales were at least positive (+0.4%), but they were well under economists projections: Retail Sales Disappoint Again: Department Stores Clobbered in 2017

I fail to see how we can possibly come close to 3.7% growth in the second quarter with those initial reports. GDPNow went totally off the mark with the construction spending revisions.

For a discussion of the construction spending impact, please see First Quarter GDP Second Estimate 1.2 Percent: Mish vs. Consensus and the embedded links on revisions and weather.

Mike “Mish” Shedlock

GDPNow vs. Nowcast Update

Both the Atlanta Fed and New York Fed updated their GDP model forecasts today. There was little change in either.

Investigating Curious Anomalies in GDPNow and Nowcast GDP Estimates

As of last Friday, the Atlanta Fed GDFPNow model for the second-quarter GDP stood at 3.4%. In contrast, the FRBNY Nowcast report was 2.2%.

GDP Forecasts: GDPNow 3.4%, Nowcast 1.9%

The GDP forecasts by the Atlanta Fed GDPNow model and the New York Fed Nowcast are once again not in the same ballpark.

FRBNY 4th Quarter GDP Nowcast 1.6% vs. GDPNow 3.1%

In sharp contrast to a GDPNow forecast of 3.1 percent for 4th quarter GDP, the FRBNY Nowcast Model estimates 4th quarter GDP at a mere 1.6 percent.

GDPNow, FRBNY Nowcast Inch Up: Gap Still Two Percent

Te Atlanta Fed GDPNow Model inched up to 1.0% from 0.9% on Friday. Nothing much mattered since a week ago.

GDPNow Silliness

Both GDPNow and the FRBNY Nowcast models will have updates on Friday. Meanwhile, it’s hard not to comment on recent forecasts from GDPNow on second quarter DGP.

GDPNow, Nowcast Near Convergence in 4th Quarter GDP Estimates

Following months of wide differences between GDP forecast models, the Atlanta Fed GDPNow and the New York Fed Nowcast models are in near convergence at 3.3% and 3.2% respectively.

Atlanta Fed GDPNow +2.8% vs. New York Fed Nowcast +1.2%

Following today’s retail sales alleged blowout, to which treasury yields actually declined, comes a big GDP upgrade by the Atlanta Fed GDPNow Model vs. a smaller jump by the New York Fed Nowcast Model.

GDPNow, Nowcast Divergence Remains One Percentage Point

In response to poor economic data this week, both the Atlanta Fed GDPNow Model and the FRBNY Nowcast Model reduced estimates by about 0.3 percentage points.