In the wake of unexpectedly grim retail sales data, Fourth-Quarter GDP estimates have plunged.

The Atlanta Fed GDPNow model took a dive today. The New York Fed Nowcast model will likely do so tomorrow.

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2018 is 1.5 percent on February 14, down from 2.7 percent on February 6. After this morning's retail sales and retail inventories releases from the U.S. Census Bureau, the nowcast of fourth-quarter real personal consumption expenditures growth fell from 3.7 percent to 2.6 percent, and the nowcast of the contribution of inventory investment to fourth-quarter real GDP growth fell from -0.27 percentage points to -0.55 percentage points.

The reason for the plunge is Shockingly Weak Retail Sales: Down 1.2% in December, Sharpest Decline Since 2009.

The Census Bureau also posted inventory data today but it is for November. The bureau will not post December inventory data until March 11, and that is after the BEA will release the first and second estimates of GDP on February 28.

GDP Pot Shot

This is part of the GDP Pot Shot I mentioned on February 8 and February 9.

More so than usual, expect a GDP Pot Shot on Feb 28, as Not All Inputs Finalized.

• Construction spending, international trade, and inventories are GDP inputs.
• The BEA will run with the advance trade, wholesale and retail inventory indicators released on February 27 rather than full reports.
• New home sales for December as well as construction appear to be complete pot shots. Those reports come out after the GDP estimate.