Economy Watch: Fourth-Quarter Slowdown for US GDP Possible
- Sep 26, 2016
The third quarter looks on track to enjoy more GDP growth for the U.S. economy than either of the year’s first two quarters—up 0.2 percent in the second quarter (second estimate), compared with an increase of 0.8 percent in the first—but projections for the fourth quarter are now a little less optimistic, according to the Federal Reserve Bank of New York’s latest Staff Nowcast, published on Friday. The FRBNY staff is now predicting 2.3 percent growth for Q3 but only 1.2 percent for Q4.
“Negative news since the report was last published two weeks ago pushed the nowcast down 0.5 percentage points for both Q3 and Q4,” the projection noted. “The largest negative contributions over the last two weeks came from manufacturing, retail sales, and housing and construction data.”
The Nowcast isn’t an official forecast of the FRBNY, the Federal Open Market Committee or any other part of the central bank, but it is produced by the New York Fed’s staff on a regular basis. The model incorporates a range of macroeconomic data as it becomes available, such as real disposable personal income, payroll employment, consumer prices, imports and exports, retail sales and more.
Separately, the Federal Reserve Bank of Atlanta’s staff produces a similar prediction called GDPNow, which focuses on the current quarter’s GDP. Its latest forecast for third-quarter GDP is 2.9 percent, a more optimistic number than produced by the Nowcast, though the prediction is down 10 basis points from the previous prediction.
Also, the GDPNow said that “the forecast of third-quarter real consumer spending growth ticked down from 3.1 percent to 3 percent after [the] Consumer Price Index release…The forecast of third-quarter real residential investment growth remained at -6.3 percent after [the] housing starts release.”