• 8 hours Why The Gold Rally Flatlined
  • 14 hours The Uranium Sector Can’t Catch A Break
  • 1 day Upcoming Fed Meeting Has Investors On Edge
  • 2 days Global Gold Sector Outlines Responsible Mining Principles
  • 2 days China’s Giant Vampire Fund Loses $120B
  • 3 days McDonalds To Roll Out Robot Drive-Thru Clerks
  • 3 days Savvy Investors Are Betting Big On This Little Data Company
  • 3 days How The Government Is Wasting Tax Money This Year
  • 4 days Supply Concerns Halt Expansion On Tianqi Lithium Plant
  • 4 days The World’s Biggest IPO Is Almost Here
  • 4 days The Relatively Of Money And Happiness
  • 5 days Wall Street Unfazed By Recession Fears
  • 5 days SoftBank Urges WeWork To Pause IPO Plans
  • 5 days Anti-Aging Market To Hit $55 Billion
  • 6 days JPM, Morgan Stanley Take Advisory Roles In Aramco IPO
  • 6 days Are Bonds In A Bubble?
  • 6 days The Unknown Media Giant Taking The World By Storm
  • 7 days From Millennial To Millionaire With One Simple Trick
  • 7 days The 5 Most Expensive Art Pieces Ever Sold
  • 8 days Are Gold Stocks Overbought?
The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

  1. Home
  2. Markets
  3. Other

New York Fed Nowcast Up to 2.4% (I'll Take 'The Under'); Modeling Error on Unemployment Rate?

Following today's reports on factory orders, international trade, jobs, and two reports on services, the New York Fed GDP Nowcast rose 0.2 percentage points to 2.4%.

If 2.4% is the over-under line, I'll take the "under".

  • The FRBNY Staff Nowcast is above 2% for both 2016:Q2 and 2016:Q3.
  • Conflicting news over the week had on net a slightly positive effect on the nowcast.
  • The largest positive contributions came from real personal consumption expenditures and the ISM manufacturing release.


2nd Quarter Nowcast

2nd Quarter Nowcast


Nowcast Details

Nowcast Details
Larger Image


Positive and Negative Factors

The biggest positive factors since the May 27 report were personal consumption expenditures, the manufacturing ISM, and the unemployment rate.

The largest negative factor since the May 27 report is construction.

I have comments from both the Atlanta Fed and New York fed from last week on their models, and I hope to report on them next week. I intended to do that this week but there has been lots of data in a shortened work week.


Modeling Error on Unemployment Rate?

I suspect the the New York Fed has a small modeling error in the civilian unemployment rate.

In general, it's logical to presume a decline in unemployment likely is a positive factor for growth, but I also propose one needs to look at why the rate declined.

Today, the unemployment rate dropped because close to half a million people dropped out of the labor force.

Moreover, there was a massive jump in involuntary part-time work of 468,000. Neither of those can remotely be considered positive for spending or GDP.

For details on today's job report, please see Fed Hiking Not: Payroll Jobs +38K, Employed +26K, Labor Force -458K, Revisions -59K.


Four GDP Estimates

  1. New York Fed Nowcast June 3: 2.4%
  2. Atlanta Fed GDPNow June 1: 2.5% GDPNow Forecast Dips to 2.5% Following Construction Report
  3. Markit June 3: 0.7% to 0.8% Composite PMI Flirts With Contraction; Markit Chief Economist Estimates GDP 0.7-0.8%
  4. ISM June 3: 1.6% Non-Manufacturing ISM Much Weaker Than Expected

The estimate average is 1.8%.

Looking ahead, I see weakening employment and weakening commercial construction. For details please see Construction Employment Declines Back-to-Back First Time Since May 2012; Questions of the Day.

 

Back to homepage

Leave a comment

Leave a comment