GDPNow Forecast Surges to 4.5% on Retail Sales, Monthly Treasury Statement

The discrepancy between GDPNow and Nowcast is up to a whopping 1.7 percentage points after today's retail sales report.

The latest GDPNow Forecast surged to 4.5% following recent economic reports.

Spread Widens

The spread between GDPNow and Nowcast is now a whopping 1.7 percentage points.

The most recent Nowcast report is from July 13.

Nowcast has hardly budged on any economic data. I do expect a jump when Nowcast reports on Friday, July 20.

The alleged margin of error on these reports is one percentage point, so if there is not a big jump in Nowcast on Friday, at least one of the reports is going to be well out of bounds.

Mike "Mish" Shedlock

Comments
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shamrock
shamrock

Margin of error is usually quoted at a 95% confidence level. Meaning there is a 95% chance that the actual value of the thing you are estimating is in the range. For example, for GDPNow the range is 4.5% +- 1.0%, or 3.5-5.5. So the odds of GDPNow being in the the margin of error is 95%, and the odds of Nowcast is also 95%. The odds of BOTH being in their respective margin of errors is (0.95 * 0.95) 90.2%. Therefore, there is a 90% probability that the actual GDP is in the overlap of 3.5% to 3.8%.

Mike Mish Shedlock
Mike Mish Shedlock

Editor

If you split the difference exactly, you get GDP at 3.65%. That gives you a margin of error of 0.15 PP. I do not know how to calculate that but it is not anywhere close to 90%. That said, and as I pointed out we have yet to hear the Nowcast forecast which comes out Friday. I do expect convergence.

Pater_Tenebrarum
Pater_Tenebrarum

Much of the increase was tied to military spending. Also, funds that were previously not spent due to the debt ceiling were released after they repealed or increased the farcical "ceiling" again.

Brian1
Brian1

Investigating Trump?

Realist
Realist

Government spending is up 5.6%! On what?