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The GDPNow and Nowcast forecasts for GDP are on a similar track this quarter.

The base forecasts are 1.6% and 1.4% respectively, whereas spreads were frequently over a full percentage point in previous quarters.

Real Final Sales

Real final sales represent the true bottom line estimate for the economy. The rest is inventory adjustments that nets to zero over time.

A bottom-line GDP print of 2.6% is nothing to sneeze at.

Rate Cut Odds

Based on real final sales, there should not be a rate cut this month, assuming GDPNow is accurate, but that's quite an assumption.

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Meanwhile, rate cut odds are 100% and Half-Point Rate Cut Odds Explode to 71%.

The Fed tried to walk back expectations of a 50 basis point cut on Friday, but 25 points minimum is a given.


I am skeptical of the GDPNow real final sales estimate because of a buildup of inventory.

On July 3, I commented the Manufacturing Sector is Rolling Over But Inventories Keep Piling Up.

Meanwhile, the BIS warns of Diminishing Returns of Monetary Policy, Zombies, Junk, Complacency.

The crosscurrents are very strong this month

Mike "Mish" Shedlock