Earlier today we reported that in its inaugural Q2 GDP nowcast, the Atlanta Fed expects 1.8% for Q2 GDP, a substantial rebound from the first official Q1 GDP print of only Q1. We also said that we expect this number (which is already 0.5% below the consensus estimate) will drop substantially in the coming weeks. Well, moment ago the New York Fed, which apparently has picked up the baton of the “most bearish regional Fed” released its own first Nowcast for Q2, in which it sees Q2 GDP growth of only 0.8%, or 1% below that of its fellow Fed.
- This week’s advance GDP release was 0.5% (0.54% when taken to two digits) which is close to the latest nowcast of 0.7% (0.72% to two digits) and consistent with the weakness predicted by the model since we started tracking the ýrst-quarter GDP growth in November 2015.
- GDP growth prospects remain moderate for 2016:Q2, standing at 0.8%.
- News from the past two weeks’ data releases, since the April 15 nowcast was released, had an overall negative effect on the nowcast for the second quarter.
- Housing and manufacturing news had the largest negative impact on the nowcasts, while manufacturers’ inventories of durable goods provided a small but positive surprise.
Visually:
If the suddenly bearish NY Fed (which may or may not be run by evil KGB agents meant to undermine the hopes and dreams of a “recovering” nation, who knows… joking aside, this is just the Fed’s way of suggesting no rate hikes are coming any time soon) is right, what does this mean in practical terms? Simple: assuming no revisions to Q1 GDP, and assuming Q2 GDP of 0.8%, then the US would have to grow at 3.8% to hit the Fed’s central tendency forecast of 2.2% GDP growth as per its latest forecast.
Good luck.
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