GDPNow Forecast For 2023 Q1 Dives To 1.1 Percent, The BEA Reports Thursday

(Click on image to enlarge)

GDPNow data from the Atlanta Fed, chart by Mish

GDPNow data from the Atlanta Fed, chart by Mish

Please consider the GDPNow Forecast for 2023 Q1 as of April 26, 2023.

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2023 is 1.1 percent on April 26, down from 2.5 percent on April 18. After recent releases the US Census Bureau and the US National Association of Realtors, the nowcasts of first-quarter real personal consumption expenditures growth and first-quarter real gross private domestic investment growth decreased from 4.2 percent and -5.8 percent, respectively, to 2.7 percent and -8.0 percent, while the nowcast of the contribution of the change in real net exports to first-quarter real GDP growth increased from 0.26 percentage points to 0.30 percentage points.

What Happened 

As I have commented before, expect more revisions, and expect them to be negative heading into recessions. 

Coming out of recessions, revisions tend to be positive. 

GDP Notes

Real Final Sales is the true bottom estimate of the economy. The rest is inventory adjustment that nets to zero over time. 

2.8 percent real final sales is not recession territory. But is that GDPNow estimate accurate?

We find out tomorrow, well sort of, because we also need to see Gross Domestic Income (GDI) that is very delayed.

Real Income Was Negative in 2022 Q4, Big Negative Revisions to GDP

Real Gross Domestic Product (GDP) and Real Gross Domestic Income (GDI) 2022 Q4

Real Gross Domestic Product (GDP) and Real Gross Domestic Income (GDI) 2022 Q4

GDP vs GDI

Gross Domestic Product (GDP) and Gross Domestic Income (GDI) are two measures of the same thing, 

GDI is delayed for many months so we will not know it's take for a while. It is signaling recession or verge of recession. GDP isn't. 

If GDP is revised to match GDI, and GDI is weak in 2023 Q1, a recession has begun. This is not all that unlikely, but nor is it certain.


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