Cory's Insights – Mon 1 Feb, 2016
GPDNow is starting off the year quite bearish with its Q1 projection
I like staying up to date on the Atlanta Fed’s GDPNow forecasts. For those of you who are not aware of the GDPNow forecast, simply put it is the Atlanta Fed taking into account new data as it is released throughout the quarter and projecting GDP of the current quarter in the US.
By the end of the quarter the projection is typically very close to the official GDP numbers. Over the past three years GDPNow has missed the BEA’s official number by more than 1% only once. Typically it is within 0.5%. Now we do need to understand that this projection can move quite a bit throughout the quarter as data flows in but the level at which we are starting Q1 is quite low. Currently GDPNow is projecting Q1 GDP growth of 1.2%. This number will move from this level but from following GDPNow over the past few years the projection typically moves down not up.
Over the past two years GDP in Q1 has been the standout in terms of slow growth so maybe this is not a big deal. It does, in the very least, show that everyone is expecting another slow growth year lead by what we can only assume right now will be GDP growth in the Q1 2016 of under 1%. There will be a lot of data released between now and the end of March but no one is expecting this data to change the overall story of slow growth… at best.
Here is the GDPNow forecast. Click here to visit the Atlanta Fed website for more information on the data.