Despite Robust Retail Sales, the GDPNow Forecast of Third-Quarter GDP Declined
As of August 30, the GDPNow Forecast is 2.0% down from 2.3% on August 26.
After yesterday's and this morning's releases from the U.S. Census Bureau and U.S. Bureau of Economic Analysis, the nowcasts of third-quarter real personal consumption expenditures growth and third-quarter real nonresidential equipment investment growth decreased from 3.4 percent and 4.4 percent, respectively, to 3.2 percent and -0.5 percent, respectively.
The drop surprised me given robust retail sales.
On Friday, I noted Personal Income Up 0.1%, Spending Up 0.6%, sarcastically commenting "What's the Problem?"
Why the drop?
It's not the data that matters but rather the data vs. what the model expected. For whatever reason, the model expected even better results from recent data.
Mike "Mish" Shedlock