The Atlanta Fed’s GDPNOW model is out with its latest forecast and it is very optimistic.
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2018 is 4.5 percent on June 27, down from 4.7 percent on June 19. The nowcast of real residential investment growth declined from 2.9 percent to 0.6 percent after the existing-home sales release from the National Association of Realtors on Wednesday, June 20, and the U.S. Census Bureau’s releases on new-home sales and costs on Monday, June 25. After this morning’s advance releases on durable manufacturing, inventories, and international trade in goods from the Census Bureau, the nowcasts of the contributions of inventory investment and net exports to second-quarter real GDP growth changed from 0.87 percentage points and 0.39 percentage points, respectively, to 0.46 percentage points and 0.66 percentage points, respectively.
Still notably above consensus…
And this has prompted the Trump administration and Trump family to gloat. Treasury Secretary Mnuchin was quick to mention it on CNBC this morning and Trump Junior decided it was worth a tweet to expose the “experts” who said it would never happen…
Wow! 4.5% is awesome. I remember when the “Experts” laughed when @realDonaldTrump said we could get there. They said we couldn’t even hit 3%. I don’t think Obama ever broke 2%. DJT’s policies are working overtime for America. https://t.co/IJmXJd3Efh
— Donald Trump Jr. (@DonaldJTrumpJr) June 27, 2018
There’s just one thing – GDPNOW is notoriously over-optimistic and ubiquitously downgraded as the quarter goes on… (remember, Q1 GDP forecats began at 5.376%!! and ended at 2…)
Let’s hope it’s different this time…
And Goldman is worried that global growth is slowing notably.
Global growth has continued to moderate from the exceptionally rapid pace of late 2017. While our estimate of sequential real GDP growth rebounded to 4.3% in Q1, our current activity indicator (CAI) has been slowing gradually in recent months and our leading CAI stands at 3.9% for June so far. This is the first time since late 2016 that our high-frequency indicators are signaling a bit of downside risk relative to our baseline forecast that global GDP growth will remain at +4% in 2018-2019.
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