by Mish

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 0.9 percent on March 15, down from 1.2 percent on March 8. The GDP growth forecast declined 0.3 percentage points on Friday when the February estimate of the model’s latent dynamic factor used to forecast yet-to-be-released GDP source data declined after the employment situation release from the U.S. Bureau of Labor Statistics (BLS). The forecast for first-quarter real consumer spending growth inched down from 1.6 percent to 1.5 percent after this morning’s retail sales report from the U.S. Census Bureau and the Consumer Price Index release from the BLS.

FRBNY Nowcast March 10, 2017

The Federal Reserve Bank of New York Nowcast Model for first quarter GDP looks like this:

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GDPNow vs. Nowcast Synopsis

  • From February 3 to March 10 the FRBNY Nowcast Model rose from 2.9% to 3.2%
  • From February 1 to March 10 the GDPNow Model fell from 3.4% to 0.9%
  • Both models use many of the same data inputs

Nowcast Detail

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GDPNow Detail

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Comparison Details

Neither report had a significant movement on February 24. Let’s start there for a closer look.

  1. On March 1, Construction spending took 0.7 percentage points off GDPNow but only 0.046 percentage points off Nowcast.
  2. On March 2, light vehicle sales took 0.3 percentage points off GDPNow. Nowcast did not factor in light vehicles sales.
  3. On March 6, the manufacturing report took 0.2 percentage points off GDPNow. The same inventory report (different name) added 0.031 percentage points to Nowcast.
  4. On March 7, the import-export trade report did nothing for GDPNow. The import-export trade report added a net 0.032 to Nowcast.
  5. On March 10, the jobs report subtracted 0.3 percentage points from GDPNow. The Jobs report added 0.003 (nothing) to Nowcast.

Comparison Summary

  • March 1, 2, 6, and 7 reports subtracted 1.2 percentage points from GDPNow.
  • March 1, 2, 6, and 7 reports added 0.017 percentage points to Nowcast.
  • The big difference is in how the models treat (or don’t treat at all), construction spending and light vehicle sales.
  • The jobs report (an additional 0.3 percentage point decline for GDPNow) may be related to a model change.

I exchanged emails with Pat Higgins, the creator of GDPNow earlier today regarding the jobs report. He replied:

Hi Mish,
I can’t say very much because of the FOMC blackout (see ). The February 2017 value of the model’s dynamic factor was revised down from 1.09 after the last GDPNow update on February 8th and to 0.62 today. The factor has mean 0 and standard deviation 1. I may be able to provide a little more insight after the blackout ends on Friday.
Pat

I suspect at least one of these models is likely to be revisited after the next GDP release. Last quarter I leaned towards the Nowcast forecast. This quarter I think GDPNow will be much closer.

Mike “Mish” Shedlock

GDPNow, Nowcast Divergence Remains One Percentage Point

In response to poor economic data this week, both the Atlanta Fed GDPNow Model and the FRBNY Nowcast Model reduced estimates by about 0.3 percentage points.

Divergence Between GDPNow and FRBNY Nowcast Hits Two Full Percentage Points

Since February 24, a string of bad economic reports drove the Atlanta Fed GDPNow estimate for 1st quarter GDP from 2.5% to 1.2%

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.

Discrepancy Between GDPNow and Nowcast is Two Percentage Points Once Again

In the past week, the GDPNow Model declined by 0.2 percentage points. The Nowcast Model for first quarter GDP inched down by 0.1 percentage points.

GDPNow Forecast Dips Slightly to 1.7%, Nowcast Steady

Economic news took a tenth of a percent off the Atlanta Fed GDPNow forecasts. The New York Fed Nowcast was stable.

Nowcast, GDPNow Diverge Widely Again: What Happened?

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

GDP Forecasts Dip Again: Forecasts Compared

In the wake of dismal retail sales, first-quarter GDP forecasts by the Atlanta Fed GDPNow model and the FRBNY Nowcast model ticked lower.

GDPNow vs. Nowcast Update

Both the Atlanta Fed and New York Fed updated their GDP model forecasts today. There was little change in either.

GDPNow Forecast Dips to 2.3%: Real Final Sales 1.3%

The discrepancy between GDPNow and Nowcast widened again. Importantly, GDPNow forecasts real final sales of just 1.3%.