GDPNow Forecast for 4Q2014 Recovers to 2.7% Growth

image4 300x256 GDPNow Forecast for 4Q2014 Recovers to 2.7% Growth

GDPNow Forecast for 4Q2014 thru Dec16, 2014 Comes in at 2.7%

After experiencing a headwind into the Government Spending contraction last week, Industrial Production pulled us out of the doldrums advancing 1.3% in Nov’14 after a lackluster October. GDPNow Forecast is now sitting at 2.7% growth.

This is what the Atlanta Fed had to say in this week’s report. “GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2014 was 2.7 percent on December 16, up from 2.2 percent on December 11. The nowcast for real GDP growth increased 0.4 percentage point following yesterday morning’s industrial production release from the Federal Reserve Board.”

It is hopeful that we can continue to impact GDP growth more positively with the remaining November and December economic indicators. The Advance Estimate for 4Q2014 comes out during the last week in Feb’14.

Source: FRB Atlanta

us-economy-exposed-debt-crisis

Tweet Peeks at 4Q2014 for W/E 12-12-2014

@KeithEOuellette: Over the past week, we finally saw the Stock Market Indexes contract a little bit. Investors appear to be reshuffling their portfolios and taking some profits before year-end. US Economic Conditions were more positive this past week with the needle moving up to the 1 O’Clock position. Last week, the GDPNow Forecast of 4Q2014 ticked up slightly to 2.2% growth as of December 11, 2014. A strong Retail Sales report had relatively no impact on forecast since the gains were offset by a surprising 1% contraction in Government Spending. We don’t believe that we will have enough time to recover back to 3% growth. The WSJ Consensus estimate is now coming in at 2.5%.

The key is to align the economic news items with the weighted average to determine their impact on GDP. We have done just that in estimating GDP growth, utilizing our simple rating model.
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For an explanation of the ratings, please refer to the post describing the Rating System.
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SUMMARY OF 4Q2014 RATINGS
POSITIVE = 19
NEUTRAL = 12
NEGATIVE = 13
As of December 12, 2014

______________________

  • Big 4 Economic Indicators continue to show growth since 1Q2014. Only IP and Retail Sales slipped over last 9-months. http://t.co/27jxHzDBH9
    RATING = 2
  • ***************

  • Real Household Income decreased in Oct’14 by 0.57% & continues its slow recovery out of its Aug 2011 trough. http://t.co/gnqqTgr7UJ
    RATING = <2>
  • ***************

  • Where are we in the Business Cycle? This analysis of Unemployment Claims illustrates we are not near a recession. http://t.co/15gLt1IrUy
    RATING = 2
  • ***************

  • Real Light Vehicle Sales per Capita is 30% down from Feb’79 peak. Good news is that it’s only 7% down from 2000 high! http://t.co/wVEKqSpf4C
    RATING = 1
  • ***************

  • Part-time employment continues to rise due to seasonal nature of Holiday Season. Expect the gap to shrink in 1Q2015. http://t.co/putR33BG9A
    RATING = 1
  • ***************

  • Small Business Optimism Index rose 2 pts to a 7-year high at 98.1 illustrating their confidence in the US Economy. http://t.co/VzdKkVJi4C
    RATING = 2
  • ***************

  • Consumer Sentiment surges to 93.8, a post-recession high since Jan’07. Are Consumers feeling the Holiday spirit? http://t.co/bV2Zy8svad
    RATING = 2
  • ***************

  • Household Net Worth . . . What is the Real Story? Have we recovered our losses yet? Unfortunately, not yet! http://t.co/m4ke0mN80v
    RATING = <2>
  • ***************
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    GDPNow Forecast for 4Q2014 is Now at 2.2%

    image3 300x247 GDPNow Forecast for 4Q2014 is Now at 2.2%

    GDPNow Forecast for 4Q2014 Comes in at 2.2% due to Contraction in Government Spending

    What happened after a decent Retail Sales report? The main issue will be a contraction for Government Spending that will reduce GDP growth by 1% or so.

    Here is what the Atlanta Fed had to say:

    The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2014 was 2.2 percent on December 11, up from 2.1 percent on December 5. The nowcast for fourth-quarter real consumption growth increased from 2.7 percent to 3.2 percent following this morning’s retail trade report from the U.S. Census Bureau. This was partly offset by the 1.2 percentage point reduction in the nowcast for real government spending growth to -0.8 percent following the monthly budget statement that the U.S. Treasury released yesterday afternoon.

    Unfortunately, all bets are off now to hit our forecast of 3% growth for 4Q2014 since we expected Government Spend to stay status quo. The good news is that Consumer Spending appears to be accelerating as we expected.

    The GDPNow estimate includes economic conditions published through December 11, 2014.

    us-economy-exposed-debt-crisis

    Tweet Peeks at 4Q2014 GDP for W/E 12-05-2014

    @KeithEOuellette: Post-Thanksgiving 10-Day Edition: Current Economic Conditions are still not having much of an impact on Stock Market Indexes, which continue to hit record highs. However, US Economic Trends split pretty much even this past week and a half, moving the needle to the 12 O’Clock range. Last week, we experienced a roller coaster ride with GDPNow Forecast bouncing back up to over 3% growth in our Pre-Thanksgiving Holiday Post, only to crash back down this week. The latest GDPNow Forecast of 4Q2014 fell from 3.1% to 2.1% growth on December 5th. We continue to believe we will attain 3% GDP growth for the balance of the year, but there are signals that the U.S. Economy is slowing down.

    The key is to align the economic news items with the weighted average to determine their impact on GDP. We have done just that in estimating GDP growth, utilizing our simple rating model.
    |
    For an explanation of the ratings, please refer to the post describing the Rating System.
    |
    SUMMARY OF 4Q2014 RATINGS
    POSITIVE = 15
    NEUTRAL = 10
    NEGATIVE = 11
    As of December 5, 2014

    ______________________

  • Conference Board’s Nov Consumer Confidence Index surprisingly falls to 88.7, down from 94.1, Oct’s downward revision. http://t.co/eFE22Lhquy
    RATING = <2>
  • ***************

  • NYSE Margin Debt declines in October signaling a possible downward revision in stock prices during 4th Quarter. http://t.co/7Pe1A13YnQ
    RATING = 1
  • ***************

  • New Jobless claims increase again, now over 300,000 for the week. The 3-month moving average remains under 300,000. http://t.co/kz4wro1kef
    RATING = <2>
  • ***************

  • PCE Price Index slightly rises to 1.44%, but is significantly below the Fed’s target for inflation of 2% to 2.5%. http://t.co/6g6rd08ZZd
    RATING = 1
  • ***************

  • Real Sales turns the tide, along w/ Real Income to continue the positive growth trend for Big 4 Avg Econo Indicators. http://t.co/aZ6lI0zxu0
    RATING = 2
  • ***************

  • Have we been in a Secular Bull Market since Mar’2009? Artificially inflated by Fed Policy or not, it looks that way! http://t.co/Y85NOozYdM
    RATING = 2
  • ***************

  • Nov’s ISM Manufacturing Index fell slightly, but came in better than expected, affecting GDPNow Forecast positively. http://t.co/DAECGNriiF
    RATING = 1
  • ***************

  • Is the Stock Market overvalued? If so, by how much? Yes, by 60% to 95%, and only exceeded by the Tech Bubble. http://t.co/qXm0W62bmz
    RATING = <2>
  • ***************

  • ISM’s Non-Manufacturing (Services) Index moderately increased in November, indicating continued US economic growth. http://t.co/Ab533Ewvmh
    RATING = 2
  • ***************

  • ADP’s Non-Farm Employment came in at 208,000 new jobs for Nov, but was under expectations. BLS Report is due Friday! http://t.co/TEostZOLkL
    RATING = 1
  • ***************

  • New Jobless Claims comes in at 297k, a 5% reduction from last week. The 4-week moving average remains under 300k. http://t.co/hXkPNtBlze
    RATING = 2
  • ***************

  • Millenials Age 18-34 are more educated, but also more unemployed than in past decades, reeking havoc on US Economy. http://t.co/ETTdU90mGo
    RATING = <2>
  • ***************

  • The BLS Jobs Report for November surges to 325,000, beating estimates of http://t.co/sO9hqk8XZF by some 100,000 jobs. http://t.co/FGs4kisfvA
    RATING = 2
  • ***************
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    GDPNow Forecast Falls 1% to an Estimated 2.1% Growth in 4Q2014

    image2 300x247 GDPNow Forecast Falls 1% to an Estimated 2.1% Growth in 4Q2014

    GDPNow Forecast Falls 1% to 2.1% due to Net Exports

    Wow! What a change of events in less than 1-week! The lowest contributor to GDP, approximately negative 2-3%, of the 4-major GDP components just negatively impacted GDPNow’s Forecast of 4Q2014 by 1%.

    Here is what the Atlanta Fed had to say about their latest forecast: “The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2014 was 2.1 percent on December 5, down from 3.1 percent on December 1. The nowcast for the fourth-quarter change in real net exports fell from $-7 billion to $-19 billion following this morning’s international trade release from the U.S. Census Bureau.”

    I guess this week’s ISM Survey Indexes and Employment Reports had minimal impact on the current GDPNow estimate as of December 5th. It’s surprising to me!

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