Step Towards Convergence

Whereas the GDPNow forecast fell from 2.3% to 2.1%, the Nowcast forecast jumped from 0.7% to 1.3%.

  • The gaps between the two competing forecasts was 1.6 percentage points a week ago.
  • Today the gap is 0.8 percentage points.

Conversation on the Models

Industrial Production

Convergence is somewhat due to Nowcast delays in factoring in industrial production impacts in the wake of the GM Strike that Ended on

I commented on the bump on December 17: Industrial Production Rebounds after GM Strike Ends.

Looking ahead, Boeing is going to have a significant impact in the first quarter.

Thousands of jobs and possibly as much as 1/3 of a point of GDP as Boeing Will Suspend 737 Max Production in January.

Inventory Analysis

The most interesting aspect of the report is GDPNow sees a first quarter drawdown in inventory but Twitter comments seem to expect an inventory build.

Inventory calculations are a crapshoot even in normal circumstances. They are even more difficult now.

Mike "Mish" Shedlock