Mike (Mish) Shedlock | May 29, 2016 02:32AM ET
The New York Fed Nowcast Model for second quarter GDP rose to 2.2% from 1.7% in today’s release.
The increase was largely due to a massive jump in new home sales. Durable goods also added to the strength.
Nowcast Highlights May 27, 2016:
Second Quarter Nowcast
Second Quarter Nowcast Detail
Housing, durable goods, and revisions added 0.254, 0.099, and 0.074 percentage points to the model forecast.
GDPNow, Nowcast, Markit Estimates
Second Quarter Real GDP Forecasts | ||
---|---|---|
Source | Forecast | |
GDPNow | 2.9% | 5/26/2016 |
Nowcast | 2.2% | 5/27/2016 |
Markit Composite | 0.7% | 5/25/2016 |
In response to the amazing jump in housing starts, Nowcast rose 0.254 percentage points as noted above. GDPNow added nothing, but did grow for other reasons.
This adds to the model discrepancy confusion I noted in on May 20.
On May 25 Markit chief economist Chris Williamson had this to say:
“A deterioration in the survey data for May deal a blow to hopes that the US economy will rebound in the second quarter after the dismal start to the year. Service sector growth has slowed in May to one of the weakest rates seen since 2009, and manufacturing is already in its steepest downturn since the recession. Having correctly forewarned of the near-stalling of the economy in the first quarter, the surveys are now pointing to just 0.7% annualised GDP growth in the second quarter, notwithstanding any sudden change in June.”
Today I spoke with a leading economist at the New York Fed about their model. I have already spoken with the Atlanta Fed.
I will have a writeup next week on the models.
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