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 [3], the Atlanta Fed's GDPNow forecast, which has traditionally been the most accurate indicator of real-time GDP swings, was just slashed [4]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."
[5]
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 [6]shows...
[7]
... 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.
