by Mish

Today’s dismal trade data was not a factor. Advance trade data on February 28 showed the trade deficit in goods jumped 7.6% to $69.2 billion, and that data was already factored into the model.

The reason for today’s plunge was light vehicle sales on March 2 and the factory orders data yesterday.

Latest forecast: 1.3 percent — March 7, 2017

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 1.3 percent on March 7, down from 1.8 percent on March 1. The forecasts for first-quarter real personal consumption expenditures growth and real nonresidential equipment investment growth fell from 2.1 percent and 9.1 percent, respectively, to 1.8 percent and 7.3 percent, respectively, after Thursday’s motor vehicles sales release from the U.S. Bureau of Economic Analysis. The forecast of the contribution of inventory investment to first-quarter growth fell from -0.50 percentage points to -0.72 percentage points after yesterday’s manufacturing report from the U.S. Census Bureau.

GDP Release Dates

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What Happened?

  • The auto sales report took off 0.3 percentage points from the March 1 estimate.
  • The factory orders and shipments report took off another 0.2 percentage points.
  • ISM services did not affect the model, nor did today’s trade report.

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Meanwhile, and in a switch in roles from a month or so ago, it is the New York Fed Nowcast Model that seems wildly high.

Competing Models

  • New York Fed Nowcast (March 3): 3.1%
  • GDPNow (March 7): 1.3%
  • Markit (March 3): 2.5%

The Markit forecast was made by Chris Williamson, Markit Chief Economist. For details, please see PMI Services Lowest Reading in 5 Months; ISM Services Highest Reading Since October 2015.

Flashback February 2

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

Take the Under
I do not buy this enormous jump in predicted GDP for one second.
For 4th quarter of 2016, the final Nowcast was at 2.1%,. GDPNow was at 2.9% off a full percentage point.
When looking at this latest GDPNow forecast of 3.4%, I will place my typical mental bet when looking at these hugely optimistic forecasts: “Take the under, way under”.

If the latest GDPNow estimate is close to the mark, it will be amusing watching the Fed hike in what they label a “surprisingly strong economy”.

Mike “Mish” Shedlock.

GDPNow Estimate Unchanged Following Trade and Factory Orders Reports

The Atlanta Fed GDPNow model remains unchanged, at 1.2%, following today’s international trade and factory orders reports.

GDPNow Forecast Plunges to 1.8% Following Personal Income and Outlays Report

As noted just a bit ago, real spending declined by the most since September of 2009.

Nowcast Leapfrogs GDPNow in 1st Quarter GDP Forecast

The latest first quarter GDP estimate by the New York Fed Nowcast jumped to a new high of 3.1%.

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%

Nowcast, GDPNow 2nd Quarter Forecasts Narrow Slightly: What’s Ahead?

On Friday, both the Atlanta Fed and New York Fed updated their GDP 2nd quarter forecasts. The FRBNY Nowcast remained at 1.9% while GDPNow dipped to 2.7% narrowing a once gigantic spread to 0.8 percentage points.

Third-Quarter GDP Forecasts: GDPNow 2.5%, Nowcast 1.5%

The volatility of GDPNow vs Nowcast is once again on display in recent weeks.

GDPNow Initial Estimate of 1st-Quarter GDP: 0.3 Percent

The GDPNow initial forecast for 1st-quarter 2019 GDP is a minuscule 0.3%.

GDPNow 3rd Quarter Estimate Ticks Down to 2.8%: Looking Ahead, What’s in Store for the Forecasts

In the wake of today’s durable goods report and last week’s housing reports the Atlanta Fed GDPNow Model for third quarter GDP ticked down 0.1 percentage points to 2.8%.

GDPNow Dives Following Jobs, ISM Report: Little Reaction in Nowcast

A volatility difference between the GDP models is again in play. GDPNow declined 0.5 PP to 2.7% while Nowcast rose 0.1.