GDPNow Forecast is Negative 51.2 Percent

Mish

In the wake of a disastrous Income and Outlays report, the GDPNow forecast is an astonishing -51.2%

The Atlanta Fed GDPNow Model forecasts a number we all hope is wrong.

After this morning's Advance Economic Indicators report from the U.S. Census Bureau and personal income and outlays release from the U.S. Bureau of Economic Analysis, the nowcast of second-quarter real personal consumption expenditures growth decreased from -43.3 percent to -56.5 percent and the nowcast of the contribution of change in real net exports to second-quarter real GDP growth decreased from 2.07 percentage points to 0.73 percentage points.

The New York Fed Nowcast estimate took a dive to -35.5% from -30.5%.

Annualized Numbers

Both numbers are seasonally-adjusted annualized quarterly-numbers so the estimate is awful, but not as bad as it looks.

Income Surges as Spending Drops Most on Record

The forecasts plunged due to a BEA report that showed Income Surges as Spending Drops Most on Record

Income and Outlays

  • Income: +10.5%
  • Disposable Personal Income: +12.9%
  • Real Disposable Income: +13.4%
  • Personal Consumption Expenditures: -13.6%
  • Real Personal Consumption Expenditures: -13.2%

Amazing Leap in Savings Rate to Record 33 Percent

As a result an alleged rise in Disposable Personal Income of 12.9% and a drop of -13.6% in spending, the Personal Savings Rate jumped to 33.0%.In 

In Why the Amazing Leap in Savings Rate to Record 33 Percent? I list eight  reasons for the decline in spending. 

There are also a couple of reasons that income may not have risen as much as reported. Please see the link for details.

Mish

Comments (36)
No. 1-16
Quatloo
Quatloo

OMG those are definitely depression-type numbers

Mish
Mish

Editor

Curiously, the net contribution for government spending was negative.

I had a conversation with Pat Higgins on that and will do a second post.

gregggg
gregggg

All self inflicted.

Mr. Purple
Mr. Purple

I, for one, am exhausted from all this winning.

Casual_Observer
Casual_Observer

I'm surprised it isnt higher. Shut everything but food and essentials down and what would one expect.

magoomba
magoomba

This should really get interesting when 40 million rents go unpaid.

jivefive99
jivefive99

Trump would want the number to be as low as possible so he can claim victory for a HUGE increase in GDP numbers in Q3.

Realist
Realist

I appreciate the short term focus, and how bad the numbers are likely to be, however I am a longer term, big picture, thinker. While I have many concerns, one of the more significant concerns will be food shortages throughout the world. While the US will be affected somewhat less than many other countries, it will be affected nonetheless. If you think that the current unrest over racial inequities is bad, just wait till people start lining up for food or a meal. In fact I believe it is already happening to a small extent in the US.

Seb
Seb

After tonight I’d say it’s -54% now...

Seb
Seb

Been saying the same shit to people all day.

JustDaFactsJack
JustDaFactsJack

A lot of Americans, after a few months at home, have realized how much of their "necessary" spending is pointless and stupid. After a couple of months of working at home and having thousands of extra dollars in their accounts thanks to not having meals out, Starbucks, paying for overpriced and overtaxed poor quality transit with bankrupt pensions, etc., I doubt they're going to go back to "spending as usual."

With the shopping districts in many American cities now smashed up, burned down and looted, any motivation to go shopping for non-necessities will be further reduced.

We're in a new era. Debt-fueled consumption is about to grind to a very visible halt.

anoop
anoop

Isn't that bullish?

Johnjkiii
Johnjkiii

What is truly shocking is all of the shock over these numbers. What will shock even more will be the repercussions of adding $ Trillions in unpayable debt to a pile that was already bloated. Asset prices will rise until they become so overpriced no one will be willing or able to pay for them. It's not if but when.

ToInfinityandBeyond
ToInfinityandBeyond

What we need are more tariffs!

Montana33
Montana33

Could the Fed vanquish the Treasury debt they purchased? I know that it's easy technically - it's literally an accounting entry. They print money using an accounting entry and they could forgive debt through an accounting entry. Could they legally do it? Perhaps we need a new law that allows a one-time writeoff only when our economy is shut down due to a global pandemic. Basically, our government owes itself money and it can forgive itself from paying itself back. Weird, I know but that's actually what it is. This epic drop in GDP and income is unprecedented. Pumping up the money supply and forgiving government debt in and of itself won't cause inflation. Desperate times. We only get inflation if our currency devalues and other governments would probably do the same if we did it. Crazy? Maybe? Possible? Maybe?


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