Wide Discrepancy

  • In the past week, the GDPNow model forecast rose to 2.0% from 1.5%.
  • In the past week, the Nowcast model forecast fell to 0.6% from 0.8%.

Not only were the starting points very different, the models responded in opposite fashion to the same economic news.

GDPNow rose 0.5 percentage points while the Nowcast fell 0.2 Percentage points, a net difference of 0.7 percentage points.

How?

The models do not react to the news itself, but rather to what happened vs what the model expected to happen.

The economic news was disappointing to Nowcast expectations, but hugely positive to the GDPNow expectation.

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Blue Chip Forecast Via GDPNow

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The range of the Blue Chip professional forecasts is 1.0% to +2.0%.

GDNow is at the very top end of Blue Chip whereas Nowcast, at 0.6% is 0.4 percentage points lower than the lowest Blue Chip estimate (but that Blue Chip estimate is a bit stale).

Jobs Data

For a discussion of today's jobs data please see:

  1. Jobs Surge in Strike-Ending and Seasonal Adjustment Rebound
  2. Trump Tweets "Manufacturing Blowout": What's the Real Story?

Mike "Mish" Shedlock

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The New York Fed released its GDP “Nowcast” today. The New York Fed model expects 1.7% seasonally adjusted annualized (SAAR), a jump of 0.5 percentage points from last week.

GDPNow vs. Nowcast Update

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GDPNow vs Nowcast: Bit of Convergence but Inventory Problem Looms

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Dueling GDP Estimates: GDPNow vs. FRBNY Nowcast

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GDPNow 1st Quarter Estimate Dips to 1.2%, FRBNY Nowcast 3.1%: One Model is Seriously Wrong

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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.