Friday, October 16, 2020

Q3 GDP Forecasts

by Calculated Risk on 10/16/2020 12:40:00 PM

From Merrill Lynch:

We are tracking 33% qoq saar for 3Q GDP growth. [Oct 16 estimate]
emphasis added
From Goldman Sachs:
We boosted our Q3 consumption growth estimate due to the stronger-than-expected September retail sales report. However, this morning’s utilities and goods production data were softer than our previous assumptions. On net, we left our Q3 GDP tracking estimate unchanged at +35% (qoq ar). [Oct 16 estimate]
From the NY Fed Nowcasting Report
The New York Fed Staff Nowcast stands at 13.8% for 2020:Q3 and 3.6% for 2020:Q4. [Oct 16 estimate]
And from the Altanta Fed: GDPNow
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2020 is 35.2 percent on October 16, unchanged from October 9 after rounding. After this week’s data releases by the U.S. Bureau of Labor Statistics, the U.S. Department of the Treasury's Bureau of the Fiscal Service, the Federal Reserve Board of Governors, and the U.S. Census Bureau, a decrease in the nowcast of third-quarter real gross private domestic investment growth from 48.4 percent to 47.0 percent was offset by an increase in the nowcast of third-quarter real personal consumption expenditures growth from 37.0 percent to 37.3 percent. [Oct 16 estimate]
It is important to note that GDP is reported at a seasonally adjusted annual rate (SAAR).  A 35% annualized increase in Q3 GDP, is about 7.8% QoQ, and would leave real GDP down about 3.3% from Q4 2019.

The following graph illustrates this decline.

Recession Measure, GDPClick on graph for larger image.

This graph shows the percent decline in real GDP from the previous peak (currently the previous peak was in Q4 2019).

This graph is through Q2 2020, and real GDP is currently off 10.2% from the previous peak.  For comparison, at the depth of the Great Recession, real GDP was down 4.0% from the previous peak.

The black arrow shows what a 35% annualized increase in real GDP would look like in Q3.

Even with a 35% annualized increase (about 7.8% QoQ), real GDP will be down about 3.3% from Q4 2019; a slightly smaller decline in real GDP than at the depth of the Great Recession.