The GDPNow Nowcast moved higher today on the “strength” (or lack thereof) of last Friday’s jobs report. 
Earlier this morning I commented on Twitter “A guess with no firm conviction GDPNow down 0.2 PP today from last report.“
I did not think much of the jobs report but the nowcast thought otherwise. All of the jump to 2.7 percent was on the September 6 jobs report.
I suspect but have not confirmed with Pat Higgins that the decline in the unemployment rate or increase in wages offset the other poor internals of the report.
Regardless, for whatever reason, the report was better than the model expected. That’s what matters, not the report itself.
My guess, “without strong conviction” was the data was worse than the model expected.
BLS Negative Job Revisions 15 of Last 21 Months
For discussion of the jobs report please see Payroll Report: Manufacturing Sheds 24,000 Jobs, Government Adds 24,000, Big Negative Revisions
Also see BLS Negative Job Revisions 15 of Last 21 Months
For another speculative call, please see Year-Over-Year Rent Inflation Is About to Fall Sharply
At the risk of looking silly, I will translate that into a CPI forecast later today.
I asked Pat Higgins for a comment of why the bounce.
I suspect wages or the drop in unemployment report.
As expected, he could not reply this time. There is a blackout period ahead of the next FOMC meeting so I do not have a definitive answer.
Can’t comment on it but can release it, too rich in irony
Are you sure of what they are reporting is factual?
Asking as a Californian, who knows how badly Democrats and “Progressives”
(Read: Communist) want to win. Crime stats aren’t all reported to the FBI from blue cities, like Los Angeles.
I’m also a senior, and no comment from SSA on what our proposed COLA will
be in 2025, either. Motley Fool published an article, guessing it will be 2.63% and
inflation is 2.9%. SSA is clearly hiding this, due to the election/installation.
SSA is NOT “clearly hiding this, due to…”. They always utilize the CPI from the 3rd quarter which is not even finished yet. Such answers are easily found with a quick Internet search.
Quick look at the underlying drivers of GDPNow, the rise to 2.5% on 9/6 from 2.0% on 9/5 is a function of PCE, so better wages make sense. Noticeable jump in the contribution to growth from PCE, going to 2.38%, up from 2.09% on 9/5. That said, interested to hear what Pat has to say.
Slide 1 (atlantafed.org)
It’s obvious. It’s because wage growth came in above expectations. No need to wait weeks for that answer.
– Regardless, for whatever reason, the report was better than the model expected.
> So per the usual course of action, a “Revision” is shortly in order. They must reverse what’s not real, and fairly quickly, before it backfires on them as usual when they wait…
– That’s what matters, not the report itself.
> Well yes and no, as the report stays as the report and gets lumped in with real reports that are factual. In the end it’s a massive distortion to the real numbers, is it not?
– My guess, “without strong conviction” was the data was worse than the model expected.
> I agree 100% because most of the time, that’s exactly what it is! It gets displayed as the numbers, discussed as the numbers, factored in as the numbers, and campaigned on as the numbers, UNTIL THERE NOT!
When it comes to gdpnow, you never explain why you support it. It’s worse than any politician in that it changes direction with every new bit of information and provides no guidance, insight, or useful information. Drop it already.
It’s been my experience that when stuff hits the fan, and sticks for a while, people get complacent. I remind myself how fast it can fly off by looking at charts from 1985 to now of the Dow, S&P, and Nasdaq.
The beatings will continue until morale improves …
Trump/Harris tomorrow.
Harris is secluded in a room in PA doing debate prep. They have brought in a Trump impersonator. You have to wonder whether the Trump impersonator has grabbed her by the …
The Trump impersonator was Alec Baldwin? Nah. That would only make Kamala cackle.
Again, as much as there are usual signals that the economy is weakening towards a recession, I still maintain there’s more energy than most models would predict due to the deficit spending & additional demand from immigration. Spending 40% more than we’re bringing in is a very big deal and creates significant positive inertia that’s hard to overcome.
At this point, my final Q3 GDPNow prediction would be 2.3%. And I fully expect Q4 to be positive. I don’t see a recession prior to sometime in 2025 unless Harris wins which may usher in a cliff in December 2024, backdated by NBER in early 2025.
I don’t see how a recession is even possible with 7% of the GDP being made up out of thin air. The quarter GDP goes negative there will be additional borrowing to make up for it. (Automatic or additional programs.) We can’t have a recession. Given that, what is the end game? How long can this go on? What happens when the borrowing must be pulled in? What makes that happen?
Its called NEGATIVE REVISIONS
have not followed anything here?
Thanks for the update, Mish.
This has quite the different feel than the evisceration you gave QTPie recently in a post with “The comment displays a massive amount of economic cluelessness about jobs and lagging indicators.” when they said this jobs report was not too bad.
Now the Atlanta Fed is making a best-guess estimate that 3rd quarter real GDP growth (almost done now) will end up at 2.5%. Maybe they are wrong. Or maybe (since they don’t provide exact monthly numbers) July and August were each near 4.0% (higher than even the second quarter) and September will be closer to -0.5% (for a three-month average of 2.5%). And the recession just started with an immense turnaround.
Or maybe the recession won’t start for a few more quarters until TOTAL production – including the mighty services component (and not just job growth) slows enough to actually go negative.
But as you’ve said many times, none of us knows for sure.
BLS doesn’t know about the new immigrants. They work, eat and pay rent. The actual GDP is higher. Debt/GDP is lower.
W. PA and OH are slightly infected. It spread all the way to ID, FL all the way to Mississippi. Can the infection spread to the unchanged first, before stable and other areas and the declined slightly will become a strong decline.
Yellen said soft landing complete. I trust her