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
Neither GDPNow nor Nowcast incorporate such factors into their models. They have a model that makes a guess. If reports perform better than their model predicted the estimates rise. Leads to some strike and weather-related peculiarities. https://t.co/r02TgLzTVR
— Mike “Mish” Shedlock (@MishGEA) December 20, 2019
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
Quarterly wash, rinse, repeat.
All govt driven 100% and what’s the deflator?Ahhh let me guess 1% lol,so big govt borrowing (printing)$300 billion and change a MONTH to drive 1-2%GDP,that’s close to 4 trillion yearly deficit,but the “official” deficit is “only”2 tril! Obviously some serious accounting fraud goin on in DC.
It’s only fraud when you don’t make the rules.
I think the governments biggest problem right now is distribution of money. They can print it and send it out but government contracts are so concentrated now its hard to get the money to the actual economy. It get sucked up by buybacks and executive pay.
To win government contracts you have to either be a huge company or have at least a couple minority designation. Aka Alaskan eskimo and Native American. That’s the gold standard.
Oh yeah and you also have to be “invited to bid”.