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GDPNow for the 3rd Quarter Surges Following Strong Trade, Inventory, and Income Reports

The GDPNow forecast blasted to 2.4 percent from 0.3 percent in the latest Atlanta Fed forecast.
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GDPNow Forecast for 2022 Q3 2022-09-30

I did not see this one coming, and I doubt it sticks, but please consider the latest GDPNow Forecast for the third quarter of 2022.

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2022 is 2.4 percent on September 30, up from 0.3 percent on September 27. After recent releases from the US Bureau of Economic Analysis and the US Census Bureau, the nowcasts of third-quarter personal consumption expenditures growth and third-quarter gross private domestic investment growth increased from 0.4 percent and -7.6 percent, respectively, to 1.0 percent and -4.2 percent, respectively, while the nowcast of the contribution of net exports to third-quarter real GDP growth increased from 1.10 percentage points to 2.20 percentage points.

The up-down, up-down pattern of the GDPNow forecasts turned up again. 

Base Forecast vs Real Final Sales

The real final sales (RFS) number is the one to watch, not baseline GDP. RFS ignores changes in inventories which net to zero over time.

Spotlight on Current Real Final Sales (RFS) Estimate

  • Base GDP Estimate: 2.4 Percent (Lead Chart)
  • RFS Total: 2.4 Percent (Lead Chart)
  • RFS Domestic: +0.2 Percent (Report Details)
  • RFS Private Domestic: -0.2 Percent (Report Details)

Recession Off?

I keep getting asked that question and if these numbers hold, there will not be a Q3 recession.

That's a big IF.

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The quarter ends today, but there is still a full month of data yet to come, and I expect the data to be weak. 

The reports causing this surge today did not seem that strong. But it is not the data that matters but what the model expected. 

The data in the last two days was way stronger than the model expected. 

For the latest income and spending reports, please see Real Spending and Real Disposable Income Inch Higher in August

This post originated at MishTalk.Com

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