Friday, April 24, 2020

Q1 GDP Forecasts: Around -7% SAAR

by Calculated Risk on 4/24/2020 05:04:00 PM

Note 1: Economists at both Merrill Lynch and Goldman Sachs expect significant downward revisions to the advance report due to incomplete source data.  The consensus is the advance report will show a decline of 4.0% SAAR in Q1.

Note 2: The NY Fed Nowcast and Atlanta Fed GDPNow models are based on released data and aren't capturing the collapse in the economy in the 2nd half of March. All forecasts, including the Merrill Lynch and other forecasts, are for the seasonally adjust annual rate (SAAR) of decline.

From Merrill Lynch:

We expect real GDP to plunge 7% in 1Q. Consumption and business capex should plummet. [SAAR Apr 24 estimate]
emphasis added
From Goldman Sachs:
On net, we lowered our estimate for GDP growth in next Wednesday’s report by three tenths to -4.8% (qoq ar). We also see increased scope for downward revisions to the source data in coming months, and we estimate the final vintages will show growth of -8.3% (vs. -7.0% previously), with the 3.5pp wedge reflecting non-response bias and incomplete source data. [SAAR Apr 24]
From the NY Fed Nowcasting Report
The New York Fed Staff Nowcast stands at -0.4% for 2020:Q1 and -7.8% for 2020:Q2. [Apr 24 estimate]
And from the Altanta Fed: GDPNow
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2020 is -0.3 percent on April 24, unchanged from April 16 after rounding. There are no subjective adjustments made to GDPNow—the estimate is based solely on the mathematical results of the model. In particular, it does not capture the impact of COVID-19 beyond its impact on GDP source data and relevant economic reports that have already been released. It does not anticipate the impact of COVID-19 on forthcoming economic reports beyond the standard internal dynamics of the model. [Apr 24 estimate]
CR Note: It appears GDP declined around 7% SAAR in Q1. The decline in Q2 will be much larger; the CBO is projecting a decline of close to 40% SAAR in Q2.