GDPNow data from the Atlanta Fed. Chart by Misch.
Latest estimate: 1.3 percent — August 1, 2022
There are only a few days left in the economic data for the third quarter. But please pay attention to the Atlanta Fed GDPNow Model Already going in the wrong direction.
The GDPNow model estimates real GDP growth (a seasonally adjusted annual rate) for the third quarter of 2022 at 1.3 percent on August 1, down from 2.1 percent on July 29. Following this morning’s Manufacturing ISM Report on Business, a construction spending report from the Institute for Supply Management and the U.S. Census Bureau, third-quarter real personal consumption expenditure growth and real gross private household investment growth declined from 2.5 percent and -1.4 percent to 1.5 percent, respectively. and -2.1 percent.
The construction remains ISM® positive. But for how long?
Earlier today I asked The construction remains ISM® positive. But for how long?
three key points
- Inventory is at its highest level since July 1984.
- New orders and employment contracts for the third month.
- Backlog of orders is barely positive
This does not bode well for the future of American manufacturing.
ISM and construction expenses
The ISM report has a way of reducing GDPNow estimates. But it’s not the numbers that really matter. Rather its the model’s expectation vs the data that matters.
Either the ISM numbers or the June construction report numbers were worse than the expected model.
The second quarter is over and I don’t usually dwell on the past, but Econoday’s reported June construction spending was -1.1 percent versus an estimated 0.2 percent.
I sent an email to Pat Higgins, the creator of GDPNow, asking which was more important, ISM or construction spending. If I get an answer, I’ll post it.
I’ll Take The Under Flashback
On July 29, 2022, I commented Initial GDP now forecast for third quarter GDP at 2.1 percent, Once again, let me give my quarterly statement. I’ll take it under.
GDPNow 2022 Q2 Preliminary Estimates from the Atlanta Fed, annotation by Mish.
January 28, 2022 Flashback
GDPNow 2022 Q1 Preliminary estimates from the Atlanta Fed, annotation by Mish.
On Jan 28, I commented Almost Everyone Is Looking the Other Way, It’s Time to Discuss the Recession
hello recession deniers
Released on Jan 28, topic of this post is “Hello recession deniers, it’s time to consider the third quarter of the already negative GDP,
Others also noted the inventory versus order disconnect.
,The spread between new orders and inventories was negative for the last 4 times in the ISM Manufacturing Index, the US was already in a recession. Never was it so low in the recessions of 2001, 1990-91 and 1981-82.,
chip check reality
san francisco anecdote
things that don’t make sense
Is Powell a blatant liar or is he the most financially illiterate?
Yellen, no recession proof
scroll to continue
Yellen on July 24
Yellen on July 25
technical slowdown
A “technical” recession is actually two quarters of negative GDP. However, this is not the definition of a recession.
Fintwit has been accused by many of the White House, Powell and Yellen of changing the definition. The definition of recession has not changed.
Here’s my take: GDP is -0.9 percent, second straight decline, but recession didn’t start in first quarter
The slowdown will be said to start in the first quarter. forget about it. See May as the beginning.
actual final sale
GDP declined for two quarters but Real Final Sales (RFS) did not. The RFS is the true bottom line estimate for the economy. The baseline number includes inventory adjustments that drop to zero over time.
Unless BEA revises RFS into negative territory, don’t expect to announce a slowdown in Q1.
The National Bureau of Economic Research (NBER) is the official mediator of the recession. It is highly unlikely to announce a slowdown in the first quarter with RFS starting at +1.1 percent.
transition time
The transition to slow growth is either an illusion or a bald-headed lie.
Those in the “lie” camp may assume that Yellen is providing cover for Fed Chair Jerome Powell to hike more rates.
I think Yellen has proven to be clueless, but that doesn’t rule out the lie.
looking ahead
The majority of GDP changes little throughout the quarter (military spending, Medicare, Social Security, food stamps, etc.)
It is the cyclical (durables and housing) that drives expansion and recession.
Energy-based inflation may see improvement in July. But fares (more than 31 per cent of CPI) are still rising. Consumer sentiment is poor and inflation-adjusted retail sales rate is not good for the full quarter.
circular discussion
Housing will be another big bust in this quarter. and to adhere to the durable goods rate housing. Manufacturing rates will be negative.
Expectations for the quarter rest entirely on consumer spending and falling inflation. But don’t count on strong retail sales.
Add all this up and you have a negative third quarter of GDP.
Origin of this post mishtalk.com,
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