Courtesy of Mish.
The GDPNow Model forecast for fourth quarter GDP dipped to 2.6% from 2.9% on December 1.
Tuesday’s commerce reports on trade and factory orders played no part of the downgrade.
Instead, auto sales and the employment report from last Friday factored into the analysis.
Latest forecast: 2.6 percent — December 6, 2016
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2016 is 2.6 percent on December 6, down from 2.9 percent on December 1. The forecast for fourth-quarter real personal consumption expenditures growth fell from 2.5 percent to 2.3 percent on December 2 after the employment situation release from the U.S. Bureau of Labor Statistics and the auto sales release from the U.S. Bureau of Economic Analysis. The forecast for fourth-quarter real nonresidential equipment investment growth has fallen from 6.6 percent to 3.9 percent since December 1.
Contributions
What Happened?
The above table explains clearly: The big upside in non-manufacturing ISM, the big upside in factory orders, and the expansion in the trade deficit, the later to the downside, were all factored in.
It’s not the reports that matter in these forecasts, it’s how the forecasts did in comparison to model expectations that matters.