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Divergence Between GDPNow and FRBNY Nowcast Hits Two Full Percentage Points

By Ilene
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Courtesy of Mish.

Since February 24, a string of bad economic reports drove the Atlanta Fed GDPNow estimate for 1st quarter GDP from 2.5% to 1.2%

In the same timeframe, the FRBNY Nowcast Model rose slightly from 3.1% tp 3.2% in a report released today.

The gap between the models is now two full percentage points. I expected the gap to partially close today, but instead, the gap widened.

GDPNOw March 8, 2017

FRBNY Nowcast March 10, 2017

I have commented before that it is not the data that matters but rather how the data came in compared to what the model expected.

However, this strongly divergent path, where not even the general overall direction is consistent, suggests something is seriously wrong with at least one of the models.


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