by Mish

First quarter GDP estimates were sure to follow, and they did.

The Atlanta Fed GDPNow Model plunged from 2.5% on February 27 to 1.8% today.

Latest forecast: 1.8 percent — March 1, 2017
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 1.8 percent on March 1, down from 2.5 percent on February 27. The forecast for first-quarter real personal consumption expenditures growth fell from 2.8 percent to 2.1 percent after this morning’s personal income and outlays release from the U.S. Bureau of Economic Analysis.

Easy Prediction

This was a pretty easy prediction. At the start of every quarter, the estimates are absurdly high, so I come out with a “Take the Under, way under” call.

November 4, 2016: GDPNow 4th Quarter Estimate Surges to 3.1% on Strength in Autos

At the beginning of the third quarter, GDPNow was a nearly a percentage point too high and also nearly a percentage point above the initial FRBNY Nowcast. Once again I will take the under as I do whenever GDPNow spikes.

February 2, 2017: First Quarter GDP Forecast 3.4 Percent: How Many Believe That?

I commented: “Does anyone buy that forecast? … I do not buy this enormous jump in predicted GDP for one second.

Curiously, the surge from 2.3% to 3.4% was based on construction spending and ISM.

Both reports were out again today, but you can see what happened.

The New York Fed Nowcast Model sits at 3.1%. It will plunge on Friday when its next report comes out.

Surprisingly Strong Economy

Today’s reports are all the more humorous given Fed comments yesterday citing a “surprisingly strong” economy.

Mike “Mish” Shedlock

GDPNow 1st Quarter Forecast Plunges to 1.3% Following Vehicle Sales and Factory Orders Reports

The GDPNow Model forecast for 1st quarter 2017 GDP plunged 0.5 percentage points to 1.3% following recent economic data.

Dueling Forecasts: GDPNow 4.2% vs Nowcast 1.8%

For the first quarter, the initial GDPNow forecast was 2.3% on January 30, 2017. The GDPNow forecast spiked quickly to 3.4% then crashed to a final estimate of 0.2% on April 27.

GDPNow Forecast Sinks on ISM and Construction Reports

The GDPNow forecast fell to 1.7% on September 3 following weak construction and ISM reports.

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 Bumps First Quarter GDP Estimate to 1.2% Following ISM Report: A Mistake?

The ISM came out with a rosy assessment of the economy today, noting 17 out of the 18 industries reported growth in March. New orders were up in 18 out of 18.

GDPNow Forecast Dips Slightly: Baseline 1.8%, Real Final Sales 1.1%

For GDPNow, a strong factory report could not overtake weak housing and trade reports. Divergence with Nowcast widens.

GDPNow Forecast Unchanged at 1.8% Despite Dismal Economic Data

GDPNow and Nowcast forecasts have converged at just under 2.0% despite dismal economic data, especially manufacturing.

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.

GDP Forecasts Sink After Outstanding Jobs Report: GDPNow vs Nowcast

The latest GDP forecasts put in a big question of the strength of the economy.