This page has been archived and commenting is disabled.
Atlanta Fed Q4 GDP Forecast Tumbles From 2.5% To 1.9%
Just a few days after we got a very disappointing Q3 GDP print of only 1.5% annualized growth, of which healthcare spending accounted for over a third, the Atlanta Fed's GDPNow forecast, which has traditionally been the most accurate indicator of real-time GDP swings, was just slashed by nearly a quarter from the 2.5% as originally reported on October 30, to just 1.9%.
The reason:
"The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2015 is 1.9 percent on November 2, down from 2.5 percent on October 30. Following this morning's Manufacturing ISM Report On Business, the forecast for fourth-quarter real consumer spending growth declined from 2.9 percent to 2.4 percent while the forecast for real equipment investment growth declined from 3.9 percent to 1.3 percent."
Wait, didn't the market jump on the ISM which at 50.1, was spun as "better than expected"?
Whatever: it certainly was good enough to push the S&P500 back above 2,100, even if should Q4 GDP indeed stay at 1.9% and well below sellside consensus once again as the following chart from @not_jim_cramer shows...
... will mean 2015 full year GDP will grow below 2.0%, and far below the 2.4% "almost escape velocity" hit in 2014. Which in turn almost assures new all time highs for stocks: after all if whatever the Fed did hasn't worked for 7 years, it will surely work in year 8.
»
- 6600 reads
- Printer-friendly version
- Send to friend
- advertisements -
We need to start an Atlanta Fed fan club......
Edit: I think they are overly optimistic this time....
I bet it's really negative
Sure it is. Just realize that the massively under-reported "GDP Deflator" (a broader measure of inflation than CPI) is where they hide the dirty laundry before reporting "real" GDP.
3% nominal growth minus a 1% GDP deflator = 2% "real" GDP growth
2% nominal growth minus a 3% GDP deflator = -1% "real" GDP growth
Got a problem? We got an adjustment for it.
- NoDebt, Villanova-educated Economist (but I'm feeling much better now!)
I'd prefer to be in a fan club of the Atlanta Rhythm Section:
https://www.youtube.com/watch?v=abBw4uXDvKY
Am I too late to buy that dip?
algos/quants have been re-pricing no interest rate increase since that hit. awesome way to continue to run a global economy. should be interesting to see what happens when GDP goes negative. most likely thats when they'll take interest rates negative with them. dow will either absolutely implode because reality settles in or we'll blast off to 25,000 because there really will be no other place but dividend payers to get any yield for pensions, seniors, etc. im not smart enough to figure out which it is so i for one pulled everything out. risk/reward simply aint worth it IMO that people wake-up to how fucked things are.
It's not that you are not smart enough, it's that you are not connected enough to get the inside info. See in a socialist centrally planned economy, the one who is closest to the decision maker (Federal Reserve) is the one who benefits the most (Warren "the crony" Buffett, Blackrock, Goldman, etc,...). Which is why having an economy or anything else of importance, in the hands of a few decision makers is a bad idea.
Ken Fisher has done a study where he debunks any meaningful correlation btw/ necessarily high GDP growth and strong market performance.
It appears in his book DEBUNKERY.
http://www.amazon.com/Debunkery-Profit-Through-Streets-Money-Killing/dp/...
Of course, Fisher is every bit the permabull making him the matter to this site's anti-matter.
How did the GDPnow prediction work out for Q3?
^^^
considering only fucking retards look at these GDP #'s with any level of "certainty about the economy", i don't know. i mean, do you believe that the economy is doing better because of the GDP print? or do u pop the hood & check the internals. ie. healthcare spending has FUCKING EXPLODED in the U.S. but the "mainstream media" WILL NOT cover this story accurately because hilllary is 13-14 months away from mounting an assault on the white house. if that deck of cards ever collapsed (and they told the truth, as-in, my premium spiked 10% and thats the BEST CASE SCENERIO OF ANYONE I KNOW), they'd be toast.
but hey, its the "law of the land" according to liberals so its gotta be good.
What's more amusing is the ZH mopes who only quote the GDP numbers when they suck.
I actually think the economy is doing ok, because the SSA numbers indicate a rise in employment and wages. And that's not based on any survey.
'Just a few days after we got a very disappointing Q3 GDP print of only 1.5% annualized growth"
We have what appears to be an endless flood of good news!
Day after day, month after month, year after year!
Nuttin but blue skies..from now on!
It they REALLY wanted to improve the economy they would revalue REAL THINGS higher (not lower) forcing people and businesses to purchase now rather than wait for higher prices.
The deterioration in the economic forecast must be the reason for the steady upward march in the stock market. I bagged my short stock position, today, taking a hefty loss, but I will not repeating that move. After over thirty years, I'm now finished with the stock market. I gave the last trading position more room than it deserved because I knew that when I got out, it would be forever. I'm holding onto my gold, though, and will keep adding to that position, buying on weakness.
Zero real growth... ALL TIME HIGH STOCK MARKET!!!!!
Sure. Makes sense.
I guess the new Star Wars movie has created a line of absolute dud toys. Every new Star Wars toy is 20% off at Toys R Us for the next month. Maybe parents don't want to spend $50 on what was $25 when the last movie came out.
I really wonder where all the unsold inventory of everything made for 2015 went? Certainly didn't sell. Ford posted their best numbers of all time, yet the dealer incentives have never been greater and I saw a nice little tidbit. There is an extra $2500 on top of all the rest on remaining 2014 stock.
REMAINING 2014 STOCK!!!!!! Those are cars that came out in 2013. There are still cars from 2013 sitting on dealer lots?????? How the fuck can you have your best quarter ever when there are still unsold cars from 2013 on your dealer's lots?
Channel stuffing has reached a whole new level.
why stocks surge so crazy today?
The consensus hockey stick among the idiot eCONomists goes one way, while the ATL FED hockey stick goes the other way!
Stimulusourus-rex
Why do people even bother with GDP?
Honestly it is a BS metric.
First problem is that it counts the same money once when the economy earns it through production, and a second time when the government taxes it away (or borrows...which is a tax on the future).
As an indicator of economic growth it is an utter, unmitigated failure.
Honestly.
The market is in the midst of a TRILLION DOLLARS of defaults...
Then the Government BORROWS $1.1 TRILLION...
And GDP shows a growth of $100 Billion.
And if it STILL DOESN'T show what they want it to...then they add adjustments to FORCE THE PICTURE PAINTED.
What kind of idiots do they take us for???????
GDP as an indicator of vigor is more worthless than inflatable muscles and a comb-over.
because they were super accurate in last quarter...and in 2Q. does anyone care to check the forecasting accuracy of the measure? it's horrible!