It’s been a wild ride for the GDPNow Model, not so for Nowcast.
GDPNow Forecast: 3.2 Percent – February 16, 2018
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2018 is 3.2 percent on February 16, unchanged from February 14. The nowcast of first-quarter real residential investment growth fell from -0.6 percent to -1.7 percent on February 15 after the industrial production release from the Federal Reserve Board of Governors and the Producer Price Index release from the U.S. Bureau of Labor Statistics. The nowcast increased to 0.6 percent after this morning’s new residential construction release from the U.S. Census Bureau.
Nowcast Forecast: 3.1 Percent – February 16, 2018
- The New York Fed Staff Nowcast for 2018:Q1 stands at 3.1%.
- News from this week’s data releases decreased the nowcast by 0.2 percentage point.
- Positive surprises from housing starts and building permits only partly offset negative surprises from retail sales, industrial production, and capacity utilization.
GDPNow Evolution
Let’s switch to a portion of GDPNow’s downloadable spreadsheet for further details.
Change in Private Inventories
Unlike Nowcast, GDPNow estimates the Change in Private Inventories (CIPI).
Overall, GDP is at 3.2%, down from 5.4% on February 1. GDPNow’s real final sales estimate stands at 2.0%, down from 4.1% on February 1.
Final sales is the true bottom line measure, because additions and subtractions to inventory net out over time.
If we get another bad retail sales report, as I suspect, that 2% estimate will shrink even further.
Boom Was a Mirage
The hype we have seen about the strengthening economy now appears to be nothing but a hurricane-related mirage, something that I suggested would happen months ago.
For a look at why the GDPNow model went haywire, please see Pat Higgins Explains the Wild 5.4% GDPNow Forecast Made February 1.
Also consider Retail Sales Dive, Negative Revisions Too: GDP Impact 4th and 1st Qtr.
The problem with models is that they do not think.
Mike “Mish” Shedlock
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The traffic is the Northeast is terrible right now, the best indicator of a strong economy.
The NYC is booming because of frothy asset bubbles. Exactly the opposite happens when these bubbles pop. It is unhealthy growth. Now that preliminary data is coming out of the effect of higher rates on spending in areas like housing, autos it is appears the economy is grinding to a halt. When that information gets through to the greedy idiots on Wall Street, what happened two weeks ago will just be a crack in the road.
The economy in the NYC region and in Eastern Massachusetts is booming at a sustained rate not seen in modern history. Stores are jam packed any night of the week as are restaurants. The thing is that $100,000 a year income per person is the new normal in this area. It very much is an employees market and I can’t think of any white collar job in Manhattan that pays less than six figures
“Yes, it IS the government’s role to stimulate the economy.” The economy moves in cycles of expansion and contraction, regardless what the government does. It is not the government’s role to stimulate the economy. A recession clears out excesses and pent up demand from delaying spending during a recession, causes it own stimulation of the economy. The 1921 recession had the greatest negative quarter of GDP on record, yet the economy rebounded sharply on its own, without help from the government. Hoover intervened in the next recession and it is now remembered as the start of the period known as the Great Depression.
Every boom is a mirage, as 100% end in a bust.
I retired last summer, my taxes have been cut by over 1100 a month. This is a great system.
The largest federal discretionary spending is for the military/ intel complex. The U.S. spends more very year on weapons which benefit no one except the arms makers. The global empire is sucking all the resources from the government. It prevents the government from providing the affordable job training for the future tech economy. Yes, it IS the government’s role to stimulate the economy. Read the Preamble to the Constitution. It states regarding the reasons for creating the Constitution :” To promote the General Welfare”. So the government should be creating jobs, but in useful areas- not making weapons that kill people.
sure, lol, he bought into the same “Keynesian” bull-shi’ite Obomber/Bushs/Clintons bought into. So yeah, he’s as guilty as his predecessors who brought us to this point. Keynes only ever said a “little debt is good to prime the pump,” he never said a LOT of debt is GREAT. That took politicians but more importantly economically illiterate Americans who belong to the free shi’ite army.
Shamrock, I explained many times there is no long-term economic benefit or for that matter any economic benefit to hurricanes. They may give a temporary short-term boost to spending but it is at long-term cost. I suggested payback in the first or second quarter and right now it appears to be first. After all these revisions, 4th quarter will not look so great either.
I’m confused as to whether you believe the “broken windows(or hurricane damage)” theory of economic growth is a joke as you normally seem to imply, because now you seem to be saying that the hurricane did lead to economic growth.
Correction: Henry Carey 1793-1879 and Friedrich List 1789-1846 and Erathmus Pershine Smith, the national system. Michael Hudson can give y more info than google. Trump will filter debt.
driven again by soaring gov’t (borrowing)spending.soaring stagflation,soaring gov’t dependency,trump will be first president in history to have (officially)multi trillion annual deficits,2 trillion next year and wait for it….3 TRILLION IN 2020 ,king of dept is right
Mathiew Carey 1760 -1839, or :Erathmus Pershine (!) Smith.
Count MIshkin, google :