Atlanta Fed GDP Forecast Plunges Below Consensus, Growth Halved In A Month

On February 1st, The Atlanta Fed's GDPNOW model forecast Q1 GDP growth in the US economy would be 5.4%... and the world (on the right) celebrated.

As a reminder, that was the highest GDP forecast by the Atlanta Fed going back to Q1 2012:

We warned at the time that GDPNOW tended to drift lower after an exuberant open... and sure enough, less than a month later, things have gone downhill fast!

As of today, the latest forecast from The Atlanta Fed is just 2.6% GDP growth - a 52% tumble in expectations since the start of the month...

After this morning's Advance Economic Indicators and durable manufacturing reports from the U.S. Census Bureau, the nowcasts of the contributions of real nonresidential equipment investment and real inventory investment to first-quarter real GDP growth declined from 0.45 percentage points and 1.20 percentage points, respectively, to 0.37 percentage points and 0.95 percentage points, respectively. The nowcast of first-quarter real residential investment growth declined from 0.6 percent on February 16 to -4.5 percent on February 26 after housing market releases from the Census Bureau and the National Association of Realtors.

And now below the concensus blue-chip estimate.

 

None of this should be a surprise - as this has been the pattern of the GDPNOW model's trajectory for multiple years - and in fact this level of GDP growth is equal to the growth seen in Q1 2017 on its way to new lows...

Comments

ejmoosa remain calm Tue, 02/27/2018 - 12:18 Permalink

Read the comments....residential housing clobbered the outlook.

And rates are only starting to rise...

 

"The nowcast of first-quarter real residential investment growth declined from 0.6 percent on February 16 to -4.5 percent on February 26 after housing market releases from the Census Bureau and the National Association of Realtors"

In reply to by remain calm

MK ULTRA Alpha ejmoosa Tue, 02/27/2018 - 12:37 Permalink

Slow down in the housing market? Could it be Wells Fargo isn't lending because of federal penalties for cheating? How much of an impact has Wells Fargo had on residential real estate?

Was there secondary market damage causing a slow down. It's a big hit when the government suspended Wells Fargo, and this might have had a chill in this sector for housing loans as other banks limited exposure.

 

In reply to by ejmoosa

taketheredpill Tue, 02/27/2018 - 12:10 Permalink

 

US Labor Force Growth averages 1%

US Labor Productivity averages 1%

Add it up = 2% Real GDP

 

This economy will not be reaching escape velocity.   Meantime "Planet DEBT" keeps growing larger.

Quivering Lip Tue, 02/27/2018 - 12:18 Permalink

Shit these guys are good. Almost as good as the CBO projecting budget surpluses going forward from 2000 on.

Yep they projected a budget SURPLUS of $5,000,000,000,000 from 2000-2100. They were only off by $13,000,000,000,000.

"Missed it by that much"

M. Smart

Give Me Some Truth Tue, 02/27/2018 - 13:43 Permalink

1) All the stats/numbers are BS, made up.

2) No independent group/MSM ever bothers to check how these numbers were actually derived.

3) Given # 1 & #2, there is no need to worry about printing accurate numbers.

4) Given #1 - #3, they can produce and publish and revise any dang figures they want.

 

Aubiekong Tue, 02/27/2018 - 14:07 Permalink

Don't worry soon things like milk will cost $8 a gallon, and then a week or two later $16.00 a gallon, a few weeks later $32.00 per gallon and our economy will be growing exponentially.

DrBrown Tue, 02/27/2018 - 14:21 Permalink

For those idiots who do not understand the CPI, GDP, UNEMPLOYMENT you name it coming out of .gov is a fabrication here's what the GDP (measure the honest way) actually is: -1.8 and has been negative since 2005. The U.S. has been in a prolonged contraction for almost 20 years. i.e. we are spiraling down the toilet.