Final Model Forecasts for First Quarter GDP: GDPNow 2.0%, Nowcast 2.9%

The advance (first) estimate of first-quarter GDP is published tomorrow. The GDPNow final estimate is 2.0%, Nowcast 2.9%

GDPNow Latest Forecast: 2.0 Percent — April 26, 2018

The final GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2018 is 2.0 percent on April 26, unchanged from April 17. The nowcast of the contribution of net exports to first-quarter real GDP growth increased from -0.68 percentage points to -0.30 percentage points after this morning's advance release on international trade in goods from the U.S. Census Bureau. This increase was offset by a decline in the nowcast of real nonresidential equipment investment growth from 7.0 percent to 4.2 percent after this morning's durable manufacturing release from the Census Bureau and a decline in the nowcast of the contribution of inventory investment to real GDP growth from 1.07 percentage points to 0.81 percentage points after the manufacturing release and this morning's advance release on retail and wholesale trade inventories from the Census Bureau.

The Bloomberg Econoday consensus estimate is 2.0% in a range of 1.3% to 2.8%.

Real final sales is the key number. That's the bottom-line GDP estimate as inventory adjustments net to zero over time.

If the GDPNow real final sales estimate is correct, and its track record has been better than Nowcast, we will have a weak first quarter GDP report.

Mike "Mish" Shedlock

Comments (6)
No. 1-6
Carl_R
Carl_R

Realist, it looks like the models are back in line with your forecast of 2% growth going forward. I'm back on the long side once again, as of this morning, btw. I continue to expect a choppy market.

El_Tedo
El_Tedo

Bad weather in March may drag down 1Q GDP a bit, but anyone with a car can tell you that the economy is booming right now. Traffic is horrendous, everywhere. That's a better bellwether than any economic indicator I know of.

Realist
Realist

Predictions can be tricky. You never know when that black swan will crap all over you. But given no surprises, like a trade war, I see no reason to change my forecast of slow and steady 2% growth in the US. And I’m sure that when the models begin to predict third quarter GDP, that they will again start out high. This will bring out the Trump supporters, who will again claim that Trump’s policies are supercharging the economy, just like they said 3,6,9 and 12 months ago. Similarly, the doom and gloom crowd will claim that we are all about to go over the cliff, just like they’ve been saying for the last several years. Eventually, the economy will finally run out of steam and slip into a recession; the markets will correct; housing will pause. I have no idea how severe or long the next recession will be. But I don’t expect it for a few years, and I also expect the economy to resume growing after the next contraction. Just like it always does.

bradw2k
bradw2k

How much of the population is getting 2% ahead per year, after subtracting the rising costs of housing, health care, property taxes, education, etc from their wages and the yield on their savings?

Realist
Realist

Who benefits from the 2%/yr growth that’s been going on for 9 years? As always, those with the skills, education, and work ethic will always benefit the most.