Dueling GDP Estimates: GDPNow vs. FRBNY Nowcast
GDPNow 2nd Quarter Evolution
Nowcast Latest forecast: 2.2 percent — May 26, 2017
- The New York Fed Staff Nowcast stands at 2.2% for 2017:Q2.
- News from this week’s data releases reduced the nowcast for 2017:Q2 by 0.1 percentage point as the positive impact from wholesale inventories data was more than offset by the negative impact from the advance durable goods report and new home sales data.
I have no estimate yet, other than to suggest GDPNow is way too high and Nowcast is likely high as well.
We do not have 1 month’s worth of data yet, and the construction spending and durable goods reports are notorious for heavy revisions. That said, the first quarter is not off to a rousing start, to say the least.
Second Quarter Reality
- April Durable Goods shipments down 0.3%, new orders down 0.7%: April Durable Goods: Yet Another Weak Second-Quarter Report
- Wholesale Inventories: Down 0.3% in April. March revised lower from 0.2% to 0.1%.Retail Inventories: Down 0.3% in April. March revised lower from 0.5% to 0.3%. For details, please see Fed Eyes Second Quarter Recovery, Expects Trump Fiscal Policy Will Expand Economy
- Trade deficit in April widens by 3.8% with exports down and imports up: Trade Deficit Widens, Exports Weak: Economists Miss the Mark
- Tax Receipts: Federal Tax Receipts Running Below Expectations
- April New Home Sales: New Home Sales Contract 11.4%: Sales Barely Up Year-Over-Year
- April Existing Home Sales: New Home Sales Contract 11.4%: Sales Barely Up Year-Over-Year
- April Existing Home Sales: Spring Housing Flop: Existing Home Sales Decline 2.3 Percent, Inventory Issues Persist
- April Housing Starts: About that Strong April Recovery: Housing Starts and Permits Flop, March Revised Lower
- April Empire State Manufacturing Survey: Empire State Manufacturing Survey Turns Negative: Welcome News?
- April Retail Sales: Sales were at least positive (+0.4%), but they were well under economists projections: Retail Sales Disappoint Again: Department Stores Clobbered in 2017
I fail to see how we can possibly come close to 3.7% growth in the second quarter with those initial reports. GDPNow went totally off the mark with the construction spending revisions.
For a discussion of the construction spending impact, please see First Quarter GDP Second Estimate 1.2 Percent: Mish vs. Consensus and the embedded links on revisions and weather.
Mike “Mish” Shedlock