GDPNow 2022 Q3 initial estimate from the Atlanta Fed, annotations by Mish.

I'll Take the Under

Betting the initial estimate is too high is historically a good bet. Estimates tend to start out high, then sink through the quarter. GDPNow final estimates are generally pretty accurate.

A few points is not enough for me to graph. So early in the quarter, I use the GDPNow graph.

Final Forecast for 2022 Q2

GDPNow Q2 final estimate data from the Atlanta Fed, chart by Mish.

Synopsis 

• The initial GDPNow forecast for 2022 Q2 was 1.9 percent with real final sales at 3.0 percent.
• The final GDPNow forecast for 2022 Q1 was -1.2 percent with real final sales at 1.1 percent.
• The actual GDP report was -0.9 percent GDP with real final sales at 1.1 percent.

Real final sales is the true bottom line measure of the economy. The rest is inventory adjustments that net to zero over time. 

January 28, 2022 Flashback

GDPNow 2022 Q1 initial estimate from the Atlanta Fed, annotations by Mish.

On January 28, I commented With Nearly Everyone Looking the Other Way, It's Time to Discuss Recession

The economy is not soaring as widely believed. Details show weakness and there are six strong reasons to believe that weakness will accelerate.

The final GDP report for the first quarter was -1.6 percent with real final sales at -1.2 percent.

GDP is -0.9 Percent, Second Straight Decline, But a Recession Did Not Start in Q1

Yesterday, I commented GDP is -0.9 Percent, Second Straight Decline, But a Recession Did Not Start in Q1

There will be talk of a recession starting in the first quarter. Forget about it. Look for May as the start.

I peg the recession start in May based off a plunge in retail sales in May coupled with a very deteriorating housing picture that also happened in May.

Looking Ahead

This initial GDPNow forecast does nothing to change my opinion. Historically speaking, it shouldn't.

Much of GDP changes very little throughout the quarter (military spending, Medicare, Social Security, food stamps, etc.)

It's cyclicals (durable goods and housing) that tend to drive expansions and recessions.

Cyclical Discussion

• July 12, 2022: Cyclical Components of GDP, the Most Important Chart in Macro
• July 14, 2022: A Big Housing Bust is the Key to Understanding This Recession

Housing rates to be another big bust this quarter. And durable goods rate to follow housing.

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