Atlanta Fed Sees Q1 GDP Soaring to 5.4%

The first estimate of Q4 GDP may have been a dud, with soaring imports resulting in a disappointing 2.6% annualized print, but that hasn't stopped the Atlanta Fed to unveil its most bullish GDP forecast in years: moments ago, the regional Fed revised its initial Q1 GDP nowcast estimate from 4.2% to a whopping 5.4% following today's strong ISM print.

This would be the highest GDP forecast by the Atlanta Fed going back to Q1 2012:

This is how the Fed justified its euphoria economic outlook:

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2017 is 5.4 percent on February 1, up from 4.2 percent on January 29. The forecast of real consumer spending growth increased from 3.1 percent to 4.0 percent after this morning's Manufacturing ISM Report On Business from the Institute for Supply Management, while the forecast of real private fixed-investment growth increased from 5.2 percent to 9.2 percent after the ISM report and this morning's construction spending release from the U.S. Census Bureau. The model's estimate of the dynamic factor for January—normalized to have mean 0 and standard deviation 1 and used to forecast the yet-to-be released monthly GDP source data—increased from 0.42 to 1.37 after the ISM report

Then again, the Atlanta Fed is best known for its initial high-balling of GDP estimates which then gradually fade as the quarter progresses and as real data replaces estimates from sentiment surveys such as the ISM.

Finally, keep in mind that the blistering Q1 2012 GDP, which was also supposed to print north of 5% was eventually marked down to just 0.8%.


MK ULTRA Alpha DC Beastie Boy Thu, 02/01/2018 - 13:24 Permalink

There has to be a leak in liquidity to force the dollar lower. Liquidity from a Chinese sell off of it's over $1 trillion US debt, CB lowering holdings of US debt, or the global bond market selling off US debt. Somewhere there is a leak.

A robust US economy means the dollar is in demand. And the global economy is growing, another source of dollar demand. So, the dollar is being dumped somewhere, possibly for political reasons.

When the Fed begins to sell off it's balance sheet, rumored at over $4.4 Trillion, of which a small minute amount was sold off, the dollar would strengthen because dollars are being taken off the market.

There is leakage, reporting is rear view mirror, lets wait and see where the dollar is being dumped. Or if the recent sell off in bond markets are supplying excess dollars on the global market.

The dollar can switch directions and go through the roof from many reasons, but it's not going to crash like the naysayers, communist and the American haters say. That's a fantasy.


In reply to by DC Beastie Boy

Fiat Burner Thu, 02/01/2018 - 13:00 Permalink

What the fuck are they smoking?

Everyone has gone bat shit crazy. The economy is the same fucking turd it has always been, yet people believe we're in an economic nirvana. The madness of crowds is on full display.

Ryland Thu, 02/01/2018 - 13:05 Permalink

It’s inevitable that GDP will give a false high because of the corporate tax amnesty that was passed bringing a flood of money back to the US.  Also if this 1.5 trillion infrastructure plan gets off the ground that will gas the number as well.  Rest assured though that none of this spending is sustainable or from organic growth.

John Law Lives Thu, 02/01/2018 - 13:11 Permalink

If true, this should put upward pressure on the 10-year Treasury yield.  Good luck to Uncle Sam if the yields ever creep back up toward 5% where they SHOULD be if we had 3% annual GDP growth  + 2% annual inflation.  The Fed needs to take their damn hands off the scale and let price discovery happen again.

Krink26 Thu, 02/01/2018 - 13:30 Permalink

That is close to double of when Obama said 2.8% is "as good as it gets". Was that true because he is such a good orator? Thats all that counts, right? When you are trying to pull people out of their "hardships". Fucking loser.