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The GDPNow Forecast and the FRNBNY Nowcast GDP forecasts for the first quarter took a leap towards convergence with the former rising and the latter falling this week.

Nowcast Latest Forecast: 2.7 Percent - March 30, 2018

  • The New York Fed Staff Nowcast stands at 2.7% for 2018:Q1 and 2.9% for 2018:Q2.
  • News from this week’s data releases decreased the nowcast for 2018:Q1 by 0.2 percentage point and decreased the nowcast for 2018:Q2 by 0.1 percentage point.
  • A negative surprise from personal consumption expenditures accounted for most of the decrease.

It's interesting to watch these models react in opposite ways to the same data. One rose .06 percentage points the other declined 0.2 percentage points.

​The GDPNow forecast jumped 0.6% on Thursday, but 0.5 percentage points was an inventory adjustment.

GDPNow Latest Forecast: 2.4 Percent - March 29, 2018

  • The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2018 is 2.4 percent on March 29, up from 1.8 percent on March 23.
  • The forecast of the contribution of inventory investment to first-quarter real GDP growth increased from 0.66 percentage points to 1.21 percentage points after yesterday’s advance releases of wholesale and retail inventories by the U.S. Census Bureau, yesterday's GDP release by the U.S. Bureau of Economic Analysis (BEA), and this morning's release of the revised underlying detail tables for the National Income and Product Accounts by the BEA.

The GDPNow assessment of real final sales, the bottom-line measure of the economy, is only 1.2%, up 0.1 percentage points from a week ago.

Advance Economic Indicators

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On Wednesday, the Census Department posted Advance Reports (preliminary) on U.S. International Trade in Goods, Wholesale Inventories and Retail Inventories.

I commented on the trade aspect in Trade Deficit Widens Again: Expect More Trump Howls. Here are the other components.​

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Wholesale inventories are up 1.1%. Retail inventories are up 0.4%. Meanwhile, consumer spending is faltering as noted earlier today in Consumer Bites the Dust in First Quarter.​

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In nominal terms, consumer spending was up 0.2% in both January and February. The inventory numbers are nominal as well.

Unless there is a pickup in consumer spending, manufacturers are ramping up production for consumer spending that will not happen.

It is too early to say the consumer has thrown in the towel for good as one quarter proves little. But if the consumer did throw in the towel, there's a clear problem on the horizon, on many fronts.

Mike "Mish' Shedlock