Updates From Q4 GDP Trackers
After today’s data the two Q4 GDP trackers that updated are telling different stories, which is not unusual at this point in a quarter.
After this morning’s trade report, Goldman Sachs raised its Q4 GDP tracking estimate by 0.1 percentage point to 1.9%, citing a trade deficit that “narrowed by $0.7bn to $105.0bn in September, below expectations.”
Goldman doesn’t provide a component breakdown of their GDP tracker.
The Atlanta Fed’s GDPNow, meanwhile, eased to 3.44% as of November 4, down from 3.74% on November 2 but still above its 3.22% initiation on October 29. It was driven mostly by a 0.17 percentage point pullback in the contribution from consumption (to 1.77 points from 1.94), with smaller declines in inventories (−0.05 point), net exports (−0.04) and residential investment (−0.03).
That leaves Goldman just below the Blue Chip consensus* of roughly 2.1% and GDPNow well above it, a gap of about 1.5 percentage points between the two.
History suggests the gap is more likely to close from the Atlanta Fed’s side. Its tracker started very strong in each of Q1, Q2 and Q3 before falling sharply as we approached the actual GDP reads: Q1 went from 3.13% to 1.99%, Q2 from 3.70% to 1.50%, and Q3 from 4.95% to 3.37% (more here: GDPNow Tracking Slowdown in Q4). Its first reading for a quarter has come in above the actual print in 34 of the last 57 quarters (excluding 2020). Goldman, for its part, was at 3.30% for Q3 the week before the release, within a tenth of the actual 3.37%, although its tracker has started the last two quarters below where it ended up.
Here’s GDPNow’s breakdown of the components as of November 4 and changes from my last update November 2:
Consumption = +1.77% (−0.17%)
Nonresidential fixed investment (business spending) = +1.34% (−0.02%)
Inventories = +0.55% (−0.05%)
Government = +0.21% (0.00%)
Residential investment = +0.02% (−0.03%)
Net exports = −0.46% (−0.04%)
GDPNow forecast: +3.44% (−0.30%)
*The top (bottom) 10 average forecast is an average of the highest (lowest) 10 forecasts in the Blue Chip survey.