Slower Growth, But No Recession: US Q4 GDP Nowcast
By James Picerno | The Milwaukee Company | jpicerno@themilwaukeecompany.com
US economic activity still appears on track to post a softer increase in the fourth quarter, but the downshift remains gradual and so recession risk is low.
Today’s update of TMC Research’s nowcasting model indicates a 2.5% increase in output for the October-through-December quarter. That’s down from Q3’s 2.8% rise, but growth in the mid-2% range is still a solid pace that suggests a recession is nowhere on the near-term horizon.
It’s also encouraging that today’s update reflects a moderate upgrade in expected Q4 growth to 2.5% from 2.0% in our previous estimate (“US Economic Growth Expected To Slow In Q4,” Nov. 13). More than half of the current quarter’s key data sets have been published, lending more support to today’s nowcast vs. the month-ago estimate. As new data is published, our model incorporates the incoming numbers—a process that, in theory, reduces uncertainty as the quarter’s data sets are revealed.
The US Bureau of Economic Analysis is scheduled to publish its first estimate of Q4 GDP on January 30. Shortly ahead of the release we’ll update our final nowcast for Q4.
TMC Research’s GDP nowcast model uses the following data sets:
· US consumer price index (inflation)
· Unemployment rate
· Real personal consumption expenditures
· Industrial production
· Non-farm private payrolls
· Manufacturing and trade industries sales
· Real personal income
· Net exports
· Housing starts
· New single family home sales
· Wholesale inventories
· Construction spending
· Factory orders
· Retail sales
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