GDPNow Estimate Unchanged Following Trade and Factory Orders Reports
Latest forecast: 1.2 percent — April 4, 2017
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 1.2 percent on April 4, unchanged from April 3. The forecast of the contribution of net exports to first-quarter real GDP growth increased from -0.17 percentage points to -0.12 percentage points after this morning’s international trade release from the U.S. Census Bureau. The forecast of the contribution of inventory investment to first-quarter growth declined from -0.76 percentage points to -0.80 percentage points after this morning’s manufacturing report from the Census Bureau.
“No change” was an easy call given the advance reports on International trade and factory orders.
This morning, in Trade Deficit Shrinks by $4.6 Billion: Effect on GDP Estimates?I had this to say:
Effect on GDP Estimates?
With exports slightly up and imports down, it’s easy to conclude, as Econoday did, this report will have a positive impact on GDP estimates.
I propose it will not do anything. Why?
Because the Advance Report on International Trade on March 28 estimated the trade deficit would shrink by $4.1 billion. The change since that report is a negligible $0.5 billion.
In Factory Orders Rise In Line With Consensus I offered this thought:
“Other than small revisions, the advance report set the tone. The revisions may add a tick or two to GDP estimates, depending on what the models predicted.”
If we break it down, the international trade report added 0.05 percentage points to the GDP estimate and the factory orders report subtracted 0.04 percentage points.
The net result was essentially nothing. I expected a net range of -0.1 to +0.1.
Mike “Mish” Shedlock