Atlanta Federal Reserve GDP model predicts USA 5.4% GDP growth in first quarter 2018 – highest since 2003

The Atlanta Federal Reserve GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2018 is 5.4 percent on February 1, up from 4.2 percent on January 29. The forecast of real consumer spending growth increased from 3.1 percent to 4.0 percent after this morning’s Manufacturing ISM Report On Business from the Institute for Supply Management, while the forecast of real private fixed-investment growth increased from 5.2 percent to 9.2 percent after the ISM report and this morning’s construction spending release from the U.S. Census Bureau. The model’s estimate of the dynamic factor for January—normalized to have mean 0 and standard deviation 1 and used to forecast the yet-to-be released monthly GDP source data—increased from 0.42 to 1.37 after the ISM report.

The Atlanta Fed GDPNow model also mimics the methods used by the BEA to estimate real GDP growth. The GDPNow forecast is constructed by aggregating statistical model forecasts of 13 subcomponents that comprise GDP. Other private forecasters use similar approaches to “nowcast” GDP growth. However, these forecasts are not updated more than once a month or quarter, are not publicly available, or do not have forecasts of the subcomponents of GDP that add “color” to the top-line number. The Atlanta Fed GDPNow model fills these three voids.

The BEA’s advance estimates of the subcomponents of GDP use publicly released data from the U.S. Census Bureau, U.S. Bureau of Labor Statistics, and other sources. Much of this data is displayed in the BEA’s Key Source Data and Assumptions table that accompanies the “advance” GDP estimate.

5.4% GDP growth would be the higher than 5.2% in 2014 Q3. The third quarter of 2014 was the highest quarterly GDP in the 2004-2017 timeframe. (Percent Change from Preceding Period,
Seasonally Adjusted Annual Rate as reported by the St Louis Federal reserve)
The US has only recorded 4 quarters out of the last 28 quarter with GDP growth at 4.0% or higher.

5.4% would the highest US quarterly GDP growth since 2003 Q3.

GDP Now forecast against officially reported quarterly GDP

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