by Mish

Let’s investigate the details and compare the current estimates.

Nowcast Latest Forecast: 2.6 Percent — April 14, 2017

  • The FRBNY Staff Nowcast stands at 2.6% for 2017:Q1 and 2.1% for 2017:Q2.
  • Incoming data during the week lead to a reduction of the nowcast by 0.2 and 0.5 percentage point for 2017:Q1 and 2017:Q2, respectively.
  • The changes in the nowcast were mainly driven by a negative surprise from retail sales.

GDPNow Latest Forecast: 0.5 Percent — April 14, 2017

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 0.5 percent on April 14, down from 0.6 percent on April 7. The forecast for first-quarter real consumer spending growth fell from 0.6 percent to 0.3 percent after this morning’s retail sales report from the U.S. Census Bureau and the Consumer Price Index release from the U.S. Bureau of Labor Statistics.

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Easy Forecast

The impact of this week’s economic forecasts was easy to predict.

On April 12, in Import Prices Decline, Export Prices Rise: Impact on 1st Quarter GDP Estimates? I had this to say: “Effectively, import prices were flat as export prices rose 0.2% for the month. This will add a tick or so to GDP estimates for the first quarter but it will likely be at the expense of negative pressures for the second quarter.”

The GDP Now model did tick up 0.1 percentage points on the import/export data, then declined 0.2 percentage points today on retail trade data.

The GDP downgrade would have been worse had it not been for the CPI running well under consensus at -0.3% for the month.

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A week ago, in Six GDP Estimates: ZeroHedge, Mish, GDPNow, Nowcast, ISM, Markit I noted my April 3 prediction of 0.6% while commenting:

The jobs report did not change my estimate.
Next Friday, we have a trifecta of CPI, Retail Sales, and Business Inventories. Those reports can easily combine to move my forecast down to zero or back above one percent.
My guess now is that something on the order of 0.5% is baked in the cake.

Looking Ahead

Next week we have Industrial Production numbers, Housing Starts, and Existing Home Sales reports. The following week we have New Home Sales, Durable Goods Orders, and International Trade reports.

The International Trade Report is unlikely to impact estimates much. I expect the durable goods report to be weak due to autos and because aircraft orders can’t keep the boat afloat forever.

The numbers most likely to have a big impact on GDP are housing related.

Had it not been for the -0.3% CPI reading today, I would have lowered my first-quarter estimate to 0.3%. As it stands, I will estimate 0.4%.

Weak restaurant sales noted in today’s retail sales report may be ominous. Risks are to the downside.

GDP Predictions

  1. Mish April 14: 0.4%
  2. GDPNow April 14: 0.5%
  3. FRBNY Nowcast April 14: 2.6%
  4. ISM April 3: 4.3%
  5. Markit April 5: 1.7%

The “advance” GDP number for the first quarter comes out on April 28.

If housing data points are bad, and the GDP deflator (inflation) is high, we can easily see a negative print on April 28.

If I am in the ballpark, the Fed will not hike in June.

Mike “Mish” Shedlock

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.

First Quarter GDP Forecast 3.4 Percent: How Many Believe That?

Yesterday, the Atlanta Fed GDPNow Model upped its forecast for first quarter GDP from 2.3% to an impressive 3.4%.

Nowcast, GDPNow Diverge Widely Again: What Happened?

After converging, the gap between the GDPNow Model forecast and the FRBNY Nowcast model has widened again.

GDPNow Forecast Dips to 0.9%: Divergence with Nowcast Hits 2.3 Percentage Points – Why?

The Fed hiked today, smack in the face of an Atlanta Fed GDPNow Model forecast of 0.9 percent.

Second Quarter GDP Forecasts Inching Towards Convergence Around Two Percent

The Federal Reserve Bank of New York released its Nowcast forecast today. The Atlanta Fed GDPNow forecast was updated on July 14 and again on July 19.

GDPNow Forecast Rises, Nowcast Dips on Same Economic Data

On Friday, the GDPNow and Nowcast models updated their 4th quarter GDP forecasts. One model rose, the other fell.

3rd Quarter GDP Estimates Collapse

In the wake of today’s economic reports, third-quarter GDP estimates from the Atlanta Fed GDPNow model and the New York Fed Nowcast model each plunged 0.8 percentage points.

Dueling GDP Estimates: GDPNow vs. FRBNY Nowcast

Both the Atlanta Fed GDPNow and the New York Fed Nowcast updated their models today. Let’s take a look at where they stand for second-quarter GDP.

GDPNow 1st Quarter Forecast Ticks Up Slightly Despite Growing Trade Imbalance: Expect Trade Howls

Despite poor but not horrendous economic reports today, the Atlanta Fed GDPNow model forecast for first quarter GDP ticked up slightly today, from 2.4% to 2.5%