GDPNow Dives Following Jobs, ISM Report: Little Reaction in Nowcast

A volatility difference between the GDP models is again in play. GDPNow declined 0.5 PP to 2.7% while Nowcast rose 0.1.

The Atlanta Fed GDPNow Forecast for fourth-quarter GDP took a half-percentage-point dive following today's economic reports.

GDPNow Forecast: 2.7% - January 5, 2018

  • The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2017 is 2.7 percent on January 5, down from 3.2 percent on January 3.
  • The forecasts of real consumer spending growth and real private fixed-investment growth decreased from 3.2 percent and 8.9 percent, respectively, to 3.0 percent and 7.6 percent, respectively, after this morning's employment report from the U.S. Bureau of Labor Statistics and this morning's Non-Manufacturing ISM Report On Business from the Institute for Supply Management.
  • The model's estimate of the dynamic factor for December—normalized to have mean 0 and standard deviation 1 and used to forecast the yet-to-be released monthly GDP source data—fell from 1.44 to 0.37 after the reports.

Nowcast Forecast: 4.0% - January 5, 2018

In contrast to the often far more volatile GDPNow Model, the New York Fed Nowcast Model rose slightly in the past week.

  • The New York Fed Staff Nowcast stands at 4.0% for 2017:Q4 and 3.4% for 2018:Q1.
  • News from this week's data releases increased the nowcast for 2017:Q4 by 0.1 percentage point and increased the nowcast for 2018:Q1 by 0.3 percentage point.
  • Positive surprises from the ISM Manufacturing PMI and from trade data accounted for most of the increase.

Other Estimates

  • Following Markit's Service PMI report yesterday, Markit Chief Economist Chris Williamson estimated 4th quarter GDP at 2-2.5%.
  • Merrill Lynch: 2.3% (as noted below)

Nowcast Out of Line

The forecast by the Nowcast model seems was out of line, which is what I said about GDPNow when it soared to 4.5%.

To be specific, I said, "I'll take the under, way under."

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Mike "Mish" Shedlock

No. 1-10

Growth should continue around 2%, just like it has for the last 9 years in the US. The rest of the world should grow around 3%. Job growth will continue as well. There are more people working in the world today than at any other time in history. There are lots of jobs sitting empty due to a lack of skills. These models are okay, but I certainly wouldn’t put much faith in them.


The is no recovery only CB driven asset price inflation. Sorry Guys


BlockchainGDPNow is calling for double digit GDP gains


The DOW seems to be behaving as if Nowcast is correct (to the Moon, Alice), working on a nice parabolic arc.


Lol listen you need to get someone you trust to help you check your spelling and punctuation in order to make your point or you will not b taken seriously. Over the years I’ve learned the hard way that someone who didn’t like my comments, if I had any kind of mistake with spelling r punctuation, they would focus on that and make me like an idiot making my point worthless, so embarrassing. There are a lot of very smart, sophisticated people on Mish’s blog here so I use my phone to check things out before I send comments out on my iPad.