GDPNow’s forecast has fallen further today, with the headline item, real final sales, now standing at 0.9%.
GDPNow Chart Notes
- The base forecast, the forecast that most observers see but shouldn’t see, is the upper blue line.
- Real final sales are the final estimate of the economy.
- The difference between the two lines is the change in private inventories (CIPI), which approaches zero over time.
- RFS doesn’t always fall short of our base estimates, it just happened to be that way this quarter.
For the latest information, click here GDPNow estimates From the Atlanta Fed.
The GDPNow model’s forecast for real GDP growth (seasonally adjusted annualized rate) for the second quarter of 2024 was 1.5% as of July 3, down from 1.7% on July 1.
Following this morning’s releases from the U.S. Census Bureau, the U.S. Bureau of Economic Analysis, and the Institute for Supply Management, our estimates for second-quarter real personal consumption expenditures growth and second-quarter real private gross domestic product growth have decreased from 1.5% and 6.9%, respectively, to 1.1% and 6.5%, while our estimate for the effect of the change in real net exports on second-quarter real GDP growth has increased from -0.94 percentage points to -0.78 percentage points.
The report is easier to understand by focusing on the following areas: Changes to donations This is what Pat Higgins, creator of GDPNow, did in the second half of the last sentence above.
Change in donations since last report
- PCE commodity: +0.05 to -0.07 to -0.12
- PCE Services: +0.97 to +0.85 to -0.15
- Total domestic private income -0.06 +1.20 to +1.14
- Change in net exports: from -0.94 to -0.78 to +0.16
- There were other very small changes too.
The first four items add up to -0.17 percentage points, reflected in a decline of 0.2 in the forecast.
what happened?
So there are two bad reports and one good report, all in terms of what the model predicted.
What is interesting is point 4: the trade deficit increased from $74.5 billion to $75.1 billion, but the contribution of net exports increased, as the model predicted a worse outlook.
When I tweeted this before the report, I knew trade was an uncertainty.
The big drop turned into a smaller drop because the model reacted favorably to the trade deficit, but I was pretty sure the model wasn’t predicting the pessimistic ISM report or the pessimistic manufacturing data.
Points 1, 2 and 3 are addressed in two reports today.
Latest Manufacturing Report Reveals Serious Weaknesses
please refer to Latest Manufacturing Report Reveals Serious Weaknesses
See also Services ISM enters recession, predicts contraction
This is very recession-inducing data.
