Atlanta Fed’s GDPNow Says U.S. Third Quarter Growth Was Almost Nil at 0.5 Percent; Wall Street Economists Are Forecasting Over 3 Percent

October 25, 2021

63

This coming Thursday morning at 8:30 a.m., the Department of Commerce’s Bureau of Economic Analysis (BEA) will release its advance estimate for U.S. Gross Domestic Product (GDP) in the third quarter. Some folks are going to have a lot of egg on their face at 8:31 a.m. That’s because the Wall Street crowd of economists has remained wildly optimistic on how the U.S. economy behaved in the third quarter, despite an upsurge in the Delta variant of COVID-19 hobbling consumer confidence and spending. Most economists on Wall Street are forecasting real GDP growth in the third quarter of more than 3 percent.

That Wall Street optimism has not been experienced by the number crunchers on the GDPNow Team at the Atlanta Fed. As of this morning, the AtlantaFed’s GDPNow crew can barely find a pulse for U.S. growth in the third quarter. They are predicting real GDP growth (seasonally adjusted annual rate) in the third quarter of just 0.5 percent. That forecast comes with the following caveat:

“GDPNow is not an official forecast of the Atlanta Fed. Rather, it is best viewed as a running estimate of real GDP growth based on available economic data for the current measured quarter….”

As the chart above indicates, the GDPNow Team’s number for third quarter GDP has been melting away faster than a snow cone in July. On August 2, it stood at 6.3 percent.