Courtesy of Mish.
Tomorrow the BEA releases its “advance” estimate for second quarter GDP. It is the first of three estimates. Numbers are subject to revision for years, even a decade or more. Here is a complied list of guesses.
- GDPNow 1.8%: July 28 GDPNow Forecast Sinks to 1.8% Following Advance Economic Indicators Reports
- FRBNY Nowcast 2.2%: July 15 GDPNow and Nowcast Forecasts Tick Up 0.1 Percent; Diving Into Interesting Details. The NY Fed had a blackout due to the FOMC meeting. It normally reports on Friday so its report is stale. I am confident its report would have been lower today had it made an update.
- Goldman Sachs 2.4%: Zerohedge tweeted earlier to day that Goldman lowered its forecast today from 2.6% to 2.4%.
- Bloomberg Econoday Survey 2.6%: The Bloomberg Econoday consensus estimate is 2.6% in a range of 2.2% to 3.4%.
- Wall Street Journal Survey 2.6%: July 28 – Gross domestic product, a broad measure of economic output, is projected to have advanced at a 2.6% annualized pace this spring, according to economists surveyed by The Wall Street Journal. The economy grew at 1.1% in the first three months of the year.
- Markit Chief Economist 1.0%: July 6 is the latest I could find from Markit chief economist Chris Williamson as noted in PMI Services Essentially Flat, Non-Manufacturing ISM Jumps Huge
- ZeroHedge 2%: I emailed ZeroHedge this morning to see if he had a guess. He does. It’s 2%.
- Mish: My thoughts and explanations below. First consider “Five Things to Watch”.
Five Things to Watch
The Wall Street Journal notes Things to Watch in the Second-Quarter GDP Report
- Above-Trend Growth: Mish comment – The Journal’s estimate of above-trend growth is based on its consensus estimate of 2.6%
- Revisions: Mish comment – This year should be a doozy. I expect GDP for 2014 to go up and 2015 to go down. The BEA is revising GDP for a decade following a data error
- Trade Challenges: Mish comment – The strong dollar has hurt US exports. Brexit will not be a factor this quarter, if ever.
- Consumer Catalyst: Mish comment – The Journal says “Recent retail-sales numbers and personal-consumption data point to relatively healthy consumer spending April through June. Those gains will likely need materialize in the GDP report to support overall economic growth near a 3% rate.” Mish says 3% is Fantasyland material.
- Inventory Adjustment: Mish comment – The Journal says “The change in private inventories tends to be a wild card in GDP reports. An advance look at inventories, released for the first time Thursday, is intended to remove some of that guesswork.”
Political Calculations on GDP Revisions
I received a ping from Ironman at Political Calculations this morning. He updated his post An Unexpected Sneak Peek of a Massive Downward GDP Revision for the U.S.?
Ironman expects something like this.
I am uncertain if that includes the massive backward revision due to a construction spending data error as noted in Diving Into the Revisions: Construction Spending Revised Lower 7 Consecutive Months! 2015 GDP Will Decline vs. Estimates: By How Much?
