Courtesy of Mish.
I am sometimes puzzled as to why the Atlanta Fed GDPNow Model moves counter to what one would normally expect following economic news releases.
For example, on December first, construction spending hit an 8-year high. On the same day the ISM was a huge disappointment.
I expected the net overall result of those to be a small net minus, with construction adding to GDP and ISM subtracting.
I commented on that idea in GDPNow Forecast for 4th Quarter Dips to 1.4% Following Weak ISM and Strong Construction Reports. Here are a few snips.
Construction Spending Beats Estimates
The consensus estimate for construction spending was +0.6% but the actual month-over-month reading was +1.0%.
Construction Contribution to GDP
As noted earlier today, this morning’s ISM report was a disaster. (See Manufacturing ISM Contracts; Lowest Reading Since June 2009; Glimmers of Hope Extinguished). But the construction report looked good.
Combined with ISM spending, I would have expected the net result of today’s reports to be an overall small minus.
Actual GDPNow Forecast Results were dramatically different.
GDPNow Forecast Sinks 0.4 Percentage Points to 1.4 Percent.
Construction Subtracts From GDP vs. Prior Estimate…
