First-Quarter GDP Forecast Dives to 0.4 Percent on Retail Sales Revision – Mish Talk
Data from Atlanta Fed, chart by Mish
Real Final Sales is the true bottom line estimate for the economy. The rest is inventory adjustments which net to zero over time
Estimates Take a Dive
The GDPNow Model Forecast for real final sales dove a full percentage point on April 25 and here is the explanation from the Atlanta Fed.
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2022 is 0.4 percent on April 26, down from 1.3 percent on April 19.
After yesterday’s annual revision to retail sales by the US Census Bureau, the nowcast for first-quarter real personal consumption expenditures growth declined from 3.8 percent to 2.4 percent.
Annual Revision
Retail sales annual revisions from Census Department
Tracking Bogus Estimates
- Some of those revisions are pretty dramatic.
- For example, the Census Bureau revised non-store retail sales (think Amazon) up 9.5 percentage points and furniture down by up 7.9 percentage points.
- The net result of the prior revisions took real final sales for 2022 Q1 down from 2.6% to 1.6% and the overall estimate from 1.3 percent to 0.4 percent.
The Annual Revisions show we have been tracking garbage retail sales numbers for a year.
The advance (first) estimate of first-quarter GDP is due Friday. The Bloomberg Econoday consensus is 1.1%.
I’ll Take the Under
Real final sales at 1.6 percent is not a terrible number but it’s a far cry from 4.0 percent projection early in the quarter.
However, it’s a number falling fast, and I question the change in private inventories (CIPI) estimates as subtracting 1.2 percentage points from GDP.
Looking Ahead
Housing is weakening and the stock market is getting clobbered. Most people seem to have little idea what that will do to final demand.
Scroll to Continue
Bubbles Pop
Here’s a view that mostly agrees with mine.
I seriously doubt the 100 years bit, but the idea is on the right track of thinking.
New Home Sales Take a Big Dive From Upward Revisions
New home sales declined 8.6 percent in March and are down 12.6 percent from a year ago.
For discussion, please see New Home Sales Take a Big Dive From Upward Revisions
Expect More Stock Market Pain Because It’s Coming
Meanwhile, please consider my April 22 post Expect More Stock Market Pain Because It’s Coming
Today’s stock market action looks very nasty again.
Headwinds are enormous. Assuming the Fed hikes 100 basis points in the next two meetings we could see a recession easily by the third quarter even if the Fed then pauses.
This post originated at MishTalk.Com.
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