Energy Could Dominate 2021

Q4 GDP Growth Estimates

The Chief Economist at RSM, Joseph Brusuelas, raised his Q4 GDP growth estimate from 2.7% to 4.8% on Wednesday because of November’s trade and inventory data. Remember, even though the quarter is over, only about 2/3rds of the data is out, so we have a lot of room to go until we know where it will end up.

Many are saying we are in a slowdown. That’s quite strong growth for a slowdown, but remember the comp was easy and we don’t have the December data yet. December and January should be the weakest part of this slowdown. We might not even get bad data in January because of the stimulus. The timing of the stimulus now doesn’t look that bad in hindsight since we know it has passed.

As of December 23rd, the Atlanta Fed GDP Nowcast showed Q4 GDP growth on pace to be 10.4% which was down from 11.1%. The next update will be next week on January 4th. I’m surprised by such a long delay given the fact that this is automatic. It’s not like the computers went on winter vacation. The decline last week was caused by the decline in the estimate for real gross private investment growth from 53.8% to 46.9%.

The estimate for real personal consumption expenditures growth rose from 4.8% to 5.1%. Some don’t think the stimulus will impact December’s data. It’s tough to say for sure. How quickly will people spend the $600? Will much spending occur in December with 2 days left in the month? There likely won’t be much stimulus spending in December especially since many people haven’t gotten the money yet.

The NY Fed’s Q4 GDP Nowcast is dramatically different from the Atlanta Fed’s model. It’s usually more negative, but this is a massive difference. The NY Fed’s Q4 GDP growth forecast from last Friday fell 40 basis points to 1.96%. Its Q1 growth estimate is near Goldman’s as it is 5.09%. It fell 45 basis points last week. Of course, the stimulus isn’t included in this model because it only looks at actual economic reports. It’s not a prediction.

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