June 27 Changes

• GDPNow base forecast dropped from 3.4 percent to 2.9 percent.
• Real Finals Sales jumped from 3.8 percent to 5.1 percent. But all of that was import-export related.
• Real Final Private Domestic Sales decreased to 1.4 percent.

The GDPNow Model said the big move happened on June 27 which made no sense to me.

We had fresh import-export data on the 26 as well as huge GDP revisions. On the 27th, the key economic report was personal income and outlays for May, nothing at all to do with imports or exports.

What Really Happened?

I had this Q&A with Pat Higgins, creator of GDPNow.

Mish to Pat Higgins

Hi Pat

By any chance is your spreadsheet missing June 26 data?

I struggle to understand a huge change in inventory investment on June 27 rather than June 26 along with the Durable Goods report and the International Trade report.

Thanks
Mish

Higgins Reply

The BEA revised CIPI from $97 billion down to 160 billion for the first quarter.

June 27 Impact on Percentage Point Contributions to GDPNow

• Gross Private Domestic Investment went from -0.38 PP to -2.19 PP
• Change in Net Exports rose from 2.07 PP to 3.49

This happened despite the fact the trade deficit increased in May by 10.5 percent.

Relayed Posts

On June 26, I reported Unexpected Huge Negative Revisions to First-Quarter GDP

The BEA revised GDP lower by 0.3 percentage points. The details are worse.

On June 26, I reported Trade Deficit Increases as Imports Decline 0.75% and Exports Decline 5.9%

• The international trade deficit was $96.6 billion in May, up $9.6 billion from $87.0 billion in April.
• Exports of goods for May were $179.2 billion, $9.7 billion less than April exports.
• Imports of goods for May were $275.8 billion, $0.1 billion less than April imports.

I have slightly different numbers because I subtract advance numbers from previous full data numbers rather than from precious advance numbers.

Doing so, I have imports down 2.082 billion and exports down 11.225 billion.

As a result of all these distortions, the real final sales nowcast sits at 5.1 percent but real final domestic sales at 1.5 percent and real final private domestic sales ate 1.4 percent.

Fed Chair Jerome Powell puts the most weight on private domestic sales so I have added that to my charts going forward.

Regardless, I don’t believe exports are leading the charge here. This is messed up data.

More By This Author:

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