GDP Estimates Dive Following Trade and Income Data


GPD estimates generally tanked this week. Curiously, the Nowcast forecast rose. I can show why.


The GDPNow forecast fell from 4.4% on September 26 to 3.8% on September 27, then to 3.6% on September 28.

Disastrous trade data accounted for 0.5 percentage points of the drop on the 27th. Income and expenditures accounted for the entire subsequent drop.


In contrast, the FRBNY Nowcast report rose from 2.3% to 2.5%. About half of that gain was due to the advance inventory report on the 27.

GDPNow vs Nowcast

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Imports Do Not Impact GDP

As noted yesterday, imports do not directly factor into GDP.

For discussion, please see Think Imports and Trade Deficits Impact GDP? Think Again!

The reason imports are in the equation are to prevent erroneous totaling of spending. So unless NOWcast accurately counts "domestic" spending, then imports are a factor.

Exports are always a factor, yet Nowcast did not analyze that data point at all.

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Checking back through the history I do see that Nowcast factored in the full trade data on September 5. Thus, Nowcast uses some "advance" reports, but not all of them.

I suspect the Nowcast model will show a decline due to trade on the next full release of import-export data.

Real Final Sales

The GDPNow estimate of "real final sales" dove to 1.7%. That is the bottom line estimate of GDP. Inventory changes net to zero over time.

1.9 percentage points of the 3.6% GDPNow estimate is CIPI, Change in Private Inventories.

If the economy is slowing while inventory is building, we have an obvious problem.

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  3. Think Imports and Trade Deficits Impact GDP? Think Again!

Mike "Mish" Shedlock

Comments (5)
No. 1-5

GDP Now does this every quarter. It'll jump up the 1st day of the new quarter to restart the same predictive path.


driven entirely by soaring big gov't and moar gov't,MIC ,obamacaid,medicaid,massive increase in new prisons/police precincts /police state booming.... multi trillion dolla yearly (monthly) big gov't deficits have arrived!


I’m still sticking with my prediction of 2% average growth for the US economy over the next 2 years, barring a black swan event. The sad part is that even with 9 years of 2% growth, unemployment at record lows and businesses pleading for skilled workers; the federal budget deficit will be over 1 trillion per year. Thank goodness those “fiscally responsible” Republicans are in charge and Trump’s tariffs (taxes) are paying down the national debt.


tariffs by our trading partners and trade wars in general have never been known to boost gdp


3.8% is still double what Mish has been predicting.