Atlanta Fed Now Sees Q4 GDP At Blistering 4.5%

True to form, the Atlanta Fed - which has a habit of overshooting massively at the start of the quarter based on optimistic estimates only to ease sharply lower on its GDP "nowcast" as the "hard" data comes in - has unveiled its latest Q4 GDP estimate , which the regional Fed expects to print at a blistering 4.5%. The number is more than 50% higher the previous Q4 guesstimate of 2.9%.

Why the surge? The Atlanta Fed looked at today's mfg ISM report and effectively doubled its forecast for real consumer spending growth and real private fixed investment growth increased from 2.8% and 4.4% , respectively, to 4.1%  and 8.8%, respectively. Breaking down the estimate, which was boosted by excess hurricane-related spending, by its constituent components:

  • Latest release affecting the model was ISM manufacturing, construction spending
  • PCE contribution est. at 2.80%
  • Nonresidential equipment investment contribution est. at 0.95%
  • Nonresidential intellectual property products investment contribution est. at 0.18%
  • Nonresidential structures investment contribution est. at -0.08%
  • Residential investment contribution est. at 0.37%
  • Government contribution est. at 0.31%
  • Net exports contribution est. at -0.20%

Here is the commentary:

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2017 is 4.5 percent on November 1, up from 2.9 percent on October 30. The forecasts of real consumer spending growth and real private fixed investment growth increased from 2.8 percent and 4.4 percent, respectively, to 4.1 percent and 8.8 percent, respectively, after this morning's Manufacturing ISM Report On Business from the Institute for Supply Management. The model's estimate of the dynamic factor for October—normalized to have mean 0 and standard deviation 1 and used to forecast the yet-to-be released monthly GDP source data—increased from 0.04 to 1.43 after the ISM report.

If accurate, this would be the highest pace of economic growth since Q3 2014, and the fourth highest quarterly GDP number since the financial crisis.

We now await to see if the forecast from the New York Fed will validate this euphoric projection.

Comments

GUS100CORRINA Wed, 11/01/2017 - 12:02 Permalink

Atlanta Fed Now Sees Q4 GDP At Blistering 4.5%My response: They forgot to add that US DEBT growth will be EXPANDING at a blistering 9.0% which is 2 times GDP growth rate!!What a CROCK OF CRAP!!! People at the FED are making this SHIT UP as they go along!!!

Grandad Grumps Wed, 11/01/2017 - 12:05 Permalink

Our business is doing very well, with nice new records in revenues and profits. But Q4 for us is generally very good and this is caused by business in general, nothing we are doing in particular.

taketheredpill Wed, 11/01/2017 - 12:06 Permalink

Atlanta Fed GDPNow is pretty accurate but you need to wait until you're closer to the end of the quarter.  Reading too much into the early numbers doesn't make sense. 

hotrod Wed, 11/01/2017 - 12:49 Permalink

AWESOME, WE CAN ADD MORE DEBT and our DEBT to GDP ratio is not affected.  Why not print 5% GDP that way we can ADD850 billion to the debt with no ratio consequence.  Calculation based on an 18 trillion GDP economy

veritas semper… Wed, 11/01/2017 - 13:39 Permalink

We have been in a f*cking recession(in fact depression) for more than 8 years. It is minus 5-6% each year.But they revised the way they calculate GDP and it includes the real infaltion showing as "GDP growth".It's like inflation,the real one is at least 8%(more like 10%) and they make it 2%. Look at the proices when you do groceries.Everything is half size and 3-4 times more expensive than 2008.We do not have an economy,it's paper shoveling and rent extraction=FIRE industry.Printing "money" and counting debt expansion as GDP growth does not mean you have a real growth.US is so full of sh*t it is embarrassing.As for the Atlanta Fed ,there is a saying:whom Gods want to perish,they make them lose their mind first.

Vilfredo Pareto Wed, 11/01/2017 - 14:42 Permalink

Now if everyone were smart and paid down debt we could avoid the resulting demand pull inflation and ride this sucker for a long time. There is a lot of consumer and corporate debt to pay down to take us back to the fifty year average.