Following Wednesday's existing home sales report, the Atlanta Fed GDP Now Model forecast for third quarter GDP fell 0.2 percentage points to 3.4%.
We will not see the BEA’s first estimate for third quarter GDP until October 28. The second estimate for second quarter GDP comes out today. Based on revisions to June data, I expect a lower estimate to second quarter GDP.
Skipping ahead, this is what the Atlanta Fed model projects for third quarter.
Latest forecast: 3.4 percent — August 25, 2016
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2016 is 3.4 percent on August 25, down from 3.6 percent on August 16.
After Wednesday's existing-home sales release from the National Association of Realtors, the forecast for third-quarter real residential investment growth declined from 1.0 percent to –2.6 percent.
I’ll Take the Under
For a look at the existing home sales report that took 0.2 percentage points off the forecast, please see Existing Home Sales Sink 3.2% in July, Down 1.6% From Year Ago.
I highly doubt we see 3.4 percent.
Upcoming GDP Estimates
The third quarter will be nearly over before the BEA tells us what GDP was for the second quarter. We see the third estimate for second quarter GDP on September 29, and the second estimate of second quarter GDP today.
On July 28, ahead of the BEA’s first estimate of GDP for the second quarter I went out on a limb and estimated 0.8%, well under the Bloomberg Econoday consensus estimate of 2.6%. Goldman Sachs estimated 2.4%, GDPNow 1.8%, and the FRBNY Nowcast came in at 2.2%, and Markit at 1.0%.
For details, please see GDP Forecast Roundup: GDPNow, Nowcast, Econoday, Goldman, Markit, ZeroHedge, Mish
Fearful Forecast
Taking everything above into consideration, my fearful forecast is the lowest in the group. I estimate second quarter GDP to be +0.8%. I am the lone brave soul under 1%.
Second Quarter Guess
For a recap of the advance (first) estimate of second quarter GDP, please see 2nd Quarter Real GDP 1.2%, 1st Quarter Revised Lower to +0.8%; Bloomberg Spins This Mess Positive.
Unless there are upward inventory or spending revisions (always a possibility in these crap shoots), I expect second quarter GDP to tick lower. Something like 0.9% seems about right. If so, the last four quarters would look like this.
- 3rd Quarter 2015: 2.0%
- 4th Quarter 2015: 0.9%
- 1st Quarter 2016: 0.8%
- 2nd Quarter 2016: 0.9% (Mish Guess)
The Econoday consensus estimate is 1.1% in a range of 0.8% to 1.5%.
Is 1% is the new normal for robust growth?