Search
All
Economics
Politics

Don’t Miss a Post. Subscribe now.

First-Quarter GDPNow Forecast Dives to 0.6 Percent After January Income Data

•

•

4 comments on First-Quarter GDPNow Forecast Dives to 0.6 Percent After January Income Data

•

GDPNow data from the Atlanta Fed, chart by Mish

The initial GDPNow estimate for the first quarter of 2021 was 0.9 percent on February 4. It’s now 0.6 percent.

The initial forecasts have been on the high side for at a year, then tend to sink as the quarter progresses. 

Current GDPNow Estimate

  • 0.6 Percent GDP
  • 2.9 Percent Real Final Sales
  • -2.3 Percent Inventory Adjustment

The current estimate were the quarter to end now would be 0.6 percent for overall GDP, 2.9% for real final sales, and an inventory adjustment of negative 2.3 percent.

The real final sales number is the true bottom line estimate of the economy. 

The overall forecast includes inventory adjustment which in this case is -2.3 percent. Inventories fluctuate to zero over time, making real final sales the important number. 

The real final sales number is a very good figure actually. But it’s very early in the quarter, at least as far as data reporting goes. 

And GDPNow estimates have tended to start out high, then sink.

Real Personal Income Declines for the 8th Time in 9 Months

Real Income and Spending data from the BEA, chart by Mish

“Real” means inflation-adjusted.

The dive in GDPNow stems from the BEA’s income and outlays report on Friday. 

For discussion, please see Real Personal Income Declines for the 8th Time in 9 Months

Inflation adjusted, real disposable income actually declined for the 9th time in 10 months but I called it 8 of 9 because of stimulus distortions clearly visible in the next chart.

Real Income and Spending data from the BEA, chart by Mish

The difference between the yellow line and the red line is taxes.

The difference between disposable income and spending is savings. But most of the saving is from high wage earners, not the bottom half of the nation mostly living paycheck-to-paycheck.

The three rounds of fiscal stimulus, one under Trump and two by Biden are clearly visible.

The stimulus radically distorts month-over-month numbers and year-over-year numbers one year later. 

The Fed’s Preferred Inflation Measure Reaches Fastest Pace Since 1983

Inflation data from St. Louis Fed, chart by Mish.

For discussion, please see The Fed’s Preferred Inflation Measure Reaches Fastest Pace Since 1983

It’s inflation-adjusted spending and income that drives GDP thus the focus on the word real.

This post originated on MishTalk.Com.

Thanks for Tuning In!

Please Subscribe to MishTalk Email Alerts.

Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.

If you have subscribed and do not get email alerts, please check your spam folder.

Mish

Subscribe to MishTalk Email Alerts.

Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.

This post originated on MishTalk.Com

Thanks for Tuning In!

Mish

Mike Shedlock

Recommended Articles

Comments to this post are now closed.

4 Comments
Newest
Oldest Most Voted
Roadrunner12
Roadrunner12
4 years ago
Just for an update on the housing market in Canada. I know most attention here has been focused on the housing bubble in the US. The Canadian housing bubble makes the US bubble look like a walk in the park. Can you imagine should even interest rates rise 2% in Canada, even 1% would throw many households for a loop. I thought the Canadian bubble would have crashed long ago but it persists. Good time to buy a house????? Maybe in Detroit or Buffalo or possibly Chicago. Remember housing is local. Inflation is gonna hurt for a large number of homeowners
“Canada’s housing market is unhinged from reality, and low interest rates — even the global pandemic — are only partially to blame, says a North American economist who expects a reckoning soon.”
“Today, the average price of a home is $686,650, according to the Canadian Real Estate Association. In Ontario, that jumps to $887,290 and in British Columbia, it’s $913,471.”
“Yet what alarms David Doyle, head of North American Strategy & Economics at Macquarie Group, a global financial services organization, is how out of sync Canadian housing prices are with other important factors — such as income and people’s ability to pay for their high-priced homes in the years ahead.

“Prices are totally disconnected from the fundamentals,” says Doyle.”

0
0
Maximus_Minimus
Maximus_Minimus
4 years ago
The meager growth point to a diminishing effect of QE infinity and fiscal megamulus. You would hope that creating debt out the wazoo will at least lead to economic growth.
0
0
vanderlyn
vanderlyn
4 years ago
 good post.    i look at shadow stats weekly for all my economics pegged to the old calculations without the con artist distortions over the decades.    i’m sure you know it.   http://www.shadowstats.com/alternate_data/inflation-charts
0
0
Winn
Winn
4 years ago
“Inventories fluctuate to zero over time”.
Inventories distorted the GDP data.
It shouldn’t be counted.
0
0

Decorate Your Walls with Mish Fine Art Images

Click each image to view details or purchase in the store.

Stay Informed

Subscribe to MishTalk

You will receive all messages from this feed and they will be delivered by email.