Login

GDPNow Forecast Dips to 2.3%: Real Final Sales 1.3%

The discrepancy between GDPNow and Nowcast widened again. Importantly, GDPNow forecasts real final sales of just 1.3%.

The divergence between the Atlanta Fed GDPNow Model and the New York Fed Nowcast Model widened again this week.

GDPNow Latest Forecast: 2.3 Percent - April 5, 2018

  • The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2018 is 2.3 percent on April 5, down from 2.8 percent on April 2.
  • The nowcast of the contribution of inventory investment to first-quarter real GDP growth fell from 1.21 percentage points to 1.05 percentage points after yesterday's manufacturing release from the U.S. Census Bureau and yesterday's light vehicle sales release from the U.S. Bureau of Economic Analysis (BEA).
  • The nowcast of the contribution of net exports to first-quarter growth declined from -0.65 percentage points to -0.72 percentage points after this morning's international trade release from the Census Bureau and the BEA.
  • The nowcast of first-quarter real consumer spending growth fell from 1.6 percent on April 2 to 1.3 percent this morning.

Nowcast Latest Forecast: 2.8 Percent - April 5, 2018

The New York Fed Staff Nowcast stands at 2.8% for 2018:Q1 and 2.9% for 2018:Q2.

The nowcast for 2018:Q1 moved up by 0.1 percentage point. This increase was largely due to parameter revisions.

The nowcast for 2018:Q2 was broadly unchanged. The positive impact of parameter revisions and a positive surprise from the ISM Prices index were mostly offset by negative surprises from nonfarm payroll employment and the ISM Employment index.

Real Final Sales

The real final sales estimate is the true bottom-line estimate of the economy. It excludes changes in inventories which net to zero over time.

At 1.3% real final sales are close to the the bottom of the range for this entire series, having been as high as 4.1% on February 1.

Mike "Mish" Shedlock

I continue to expect 2% growth over the next few years (just like the last 10 years). I doubt if the US economy can do much better given the debt levels, skilled labour shortages, and policy uncertainty. The worry, as always, is Trump starting a trade war. That could indeed hurt the US badly and cause a recession.

How much of that 2% growth that you expect will be financed by government debt? Any idea? Seems like a con game to me.

I am a believer in economic growth 9 years out of 10, due to human ingenuity and hard work. Governments and Central Banks rarely contribute anything positive to economic growth. Usually, the growth continues in spite of their interference. I suspect US growth could be 3%, rather than 2%, if not for this interference.

And don’t forget - this is with the FedGov running a trillion $ annual deficit.

Stories