The latest GDP forecasts put in a big question of the strength of the economy.
Friday's jobs report looked pretty good, didn't it?
Interestingly, the GDP forecasts did not think much of it, and neither did I.
If you think that makes Nowcast more reliable, then another curious aspect is that the final forecast of GDPNow tends to be better.
GDPNow Latest forecast: 2.5 percent — March 9, 2018
Nowcast Latest forecast: 2.8 percent — March 9, 2018
One reason for GDPNow volatility is that it forecasts more frequently. Nowcast forecasts once a week, on Friday, provided there is not an FOMC blackout.
For some reason, Nowcast is blacked out near FOMC days while GDPNow isn't.
Regardless, that does not come close to explaining the difference between the reports.
Dynamic factors are the major contributor to GDPnow volatility.
I discussed this at least twice before, most recently on March 7 in Another GDPNow ISM Spike Fades where I shared some Emails with Pat Higgins, creator of GDPNow.
My comment today is the same as it was then:
For a discussion of Friday's jobs report, please see Little Wage Inflation But February Jobs Jump 313,000.
I have to wonder: What the heck was GDPNow forecasting that this report was a disappointment? One might also wonder why there was no reaction at all by Nowcast.
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