GDPNow Forecast of 4Q2014 is Currently at 2.3%

image6 300x250 GDPNow Forecast of 4Q2014 is Currently at 2.3%

GDPNow Forecast of 4Q2014 Falls Again to 2.3% Growth

After another poor report on Industrial Production and a slight uptick in new residential construction, the GDPNow Forecast for 4Q2014 decreases from 2.6% to 2.3% through November 19, 2014.

The Atlanta Fed says “The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2014 was 2.3 percent on November 19, down from 2.6 percent on November 14. The GDP nowcast fell 0.4 percentage point to 2.2 percent on November 17 after the industrial production release from the Federal Reserve. Following this morning’s new residential construction release from the U.S. Census Bureau, the GDP nowcast ticked up 0.1 percentage point to 2.3 percent.”

We are still hopeful for a strong Retail Sales Report and continued jobs creation, although most will be on a part-time basis for the Holiday Season, to recover to 3% growth by year-end.

us-economy-exposed-debt-crisis

Tweet Peeks at 4Q2014 GDP for W/E 11-14-2014

@KeithEOuellette: Current Economic Conditions are not having much of an impact on Stock Market Indexes, which continue to hit record highs and also in spite of the end of the Fed’s QE Programs. The initial Overall rating started 4Q2014 GDP on a positive note, but ended this week with some negative trends. Last week, the latest GDPNow Forecast of 4Q2014 fell from 3.1% to 2.6% growth. 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.
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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 = 5
NEUTRAL = 4
NEGATIVE = 6
As of November 14, 2014

______________________

  • Multiple jobs held by individuals reveal a dramatic shift in Employer hirings. Clearly, they are avoiding ObamaCare. http://t.co/E5OTCzRDqT
    RATING = <2>
  • ***************

  • Demographic trends in Employment of the 50-year old an over workforce illustrates some jaw-breaking statistics. http://t.co/g1EO1YEJzf
    RATING = 1
  • ***************

  • Ratio of PT versus FT Employment remains stubbornly high in relation to full-time jobs lost in The Great Recession. http://t.co/AVjq2vyuZp
    RATING = <2>
  • ***************

  • Light Vehicle Sales per Capita continues its growth since the Recession. Will it continue. . . that is the question? http://t.co/eAa9LRohv1
    RATING = 2
  • ***************

  • Oil Price/Barrel has finally broken the $100 price and now sits under $80 per barrel, as it translates to the pump. http://t.co/xf2l5RVjuz
    RATING = 2
  • ***************

  • Real Earnings and Average Hours Worked by Private Employees continue to slightly improve, but painfully slow. http://t.co/sbcjpe3ozb
    RATING = 1
  • ***************

  • Employee Compensation as a percent of GNP deteriorates, while Corporate Profits to GNP ratio accelerates. GAP widens. http://t.co/wZvc4XTgq9
    RATING = <2>
  • ***************

  • Have we reached Full Employment at a 5.8% UE rate? Initial Unemployment Claims increase unexpectedly. http://t.co/4abvCnYBZW
    RATING = <2>
  • ***************
    @@@@@@@@@@@@@@@

GDPNow Forecasts 2.6% Growth for 4Q2014

image5 300x253 GDPNow Forecasts 2.6% Growth for 4Q2014

GDPNow Forecast For 4Q2014 moves down 0.9% to 2.2%, and then bounces back up to 2.6%

Over the last 10-day period, GDPNow Forecast fell from 3.1% to 2.2% and then bounced back to 2.6% on November 14, 2014. A volatile beginning to the estimated 4Q2014 GDP Growth Rate. The trend has been revised down by the Blue Chip Consensus estimates, ranging now from 2.3% to 3.4% and settling in at 2.7% estimated growth, a 10% negative adjustment.

The Atlanta Fed states “The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2014 was 2.6 percent on November 14, down from 3.1 percent on November 3. The GDP nowcast fell 0.9 percentage point to 2.2 percent on November 7 following the U.S. Bureau of Labor Statistics’ employment situation release. Over the past three days the nowcast increased 0.4 percentage point following the wholesale and retail trade releases from the U.S. Census Bureau and the monthly budget report from the U.S. Department of the Treasury.

We are now well into the Holiday Season when some Merchants attain 40% of their Total Annual Sales. The good news is that the University of Michigan’s Consumer Sentiment Index has hit another Post-Recession high at 89.4 in October’s Advance Estimate. The Michigan Index tracks fairly close to the Conference Board’s Consumer Confidence Index, which is still below its Pre-Recession high, but still trending up. The 3rd piece of good news is that the Conference Board’s Small Business Optimism is also close to its Post-Recession high.

Based on these confidence indexes, we are hopeful that Retail Sales will accelerate consumer spending during this Holiday Season.

us-economy-exposed-debt-crisis

Tweet Peeks at 4Q2014 GDP for W/E 11-07-2014

@KeithEOuellette: Because several of the economic releases are still being announced for the 3rd Quarter, we are only listing 4th Quarter Tweet Peeks’ activity today. The initial Overall rating starts 4Q2014 GDP on a positive note. Last week, the latest GDPNow Forecast of 4Q2014 came in at 3.1% growth. 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 continues to slow 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.
|
INITIAL SUMMARY OF 4Q2014 RATINGS
POSITIVE = 3
NEUTRAL = 2
NEGATIVE = 2
As of November 7, 2014

______________________

  • Average of the Big 4 Economic Indicators contracts for the first time in 8 months. Is the US economy slowing down? http://t.co/dI9hqvMqtf
    RATING = <2>
  • ***************

  • Have we been in a Secular Bull Market since Mar’2009, or is this a lull before the storm continuing the Secular Bear? http://t.co/kfyGIAqGfI
    RATING = 1
  • ***************

  • ISM’s Manufacturing Index shows continued growth, far ahead of expectations and well above recessionary levels. http://t.co/DRpuJ5Peeg
    RATING = 2
  • ***************

  • ISM Non-Manufacturing (Services) Index falls in October from 58.6% to 57.1%, indicating slower growth. http://t.co/CACMhU5LQL
    RATING = <2>
  • ***************

  • ADP Non-Farm Employment came in at 230,000 new jobs in October. The Unemployment Rate should continue to tick down. http://t.co/NJiWPfBKTN
    RATING = 2
  • ***************

  • New Jobless Claims continue to fall beating estimates yet again! Unemployment should drop throughout the 4th Quarter. http://t.co/x04vqomIQ6
    RATING = 2
  • ***************

  • BLS’ Oct’14 New Jobs comes in at a disappointing 214,000 new jobs, but upward revisions reduced unemployment to 5.8%. http://t.co/HJzdy9fHYa
    RATING = 1
  • ***************
    @@@@@@@@@@@@@@@

US Economic Trends and GDPNow Forecast for 4Q2014

image2 300x253 US Economic Trends and GDPNow Forecast for 4Q2014

The Atlanta Fed’s GDPNow Forecast of 4Q2014 GDP Falls to 3.1%

The Atlanta Fed’s GDPNow forecast of 4Q2014 GDP was adjusted down from 3.3% to 3.1% thanks to lower exports in this week’s International Trade Report. The Fed had this to say about the adjustment, “The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2014 was 3.1 percent on November 4, down from 3.3 percent on November 3. The forecast for the change in real net exports fell from $4 billion to minus $3 billion following this morning’s international trade release from the U.S. Census Bureau.”

This week’s economic indicator releases included 1) New Orders for Manufactured Goods, which fell in September, but not affecting the current quarter’s GDPNow’s Forecast, and 2) the October BLS’ Employment Report. The BLS had this to say about the changes in the employment situation, “Total nonfarm payroll employment rose by 214,000 in October, and the unemployment rate edged down to 5.8 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in food services and drinking places, retail trade, and health care.”

We still have a few September and 3rd Qtr economic indicators that have not yet been announced, including:

  • Merchant Wholesale Inventory
  • Monthly Business Inventory
  • Quarterly Manufacturers Profits
  • Quarterly Retailers Profits
  • Quarterly Services for the Information Sector

Rather than wait for these to be released, I decided to publish the last 3 releases for the key economic indicators that we consistently watch. See below keeping in mind that updates are not available for the 5 listed above.

image3 300x225 US Economic Trends and GDPNow Forecast for 4Q2014

Key US Economic Indicator Trends

image4 300x225 US Economic Trends and GDPNow Forecast for 4Q2014

Key US Economic Indicator Trends

Only 5 of the 14 indicators listed are color-coded green for a continued growth trend. We classify the current trend as “cautionary” for the 4th Quarter. However, we are hopeful that the Holiday Season will bring good tidings to the US Economy and our Christmas wish is for the U.S. to maintain its 3% GDP Growth Rate through the New Year.

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