Nowcasting Q3

Believe it or not, we’re in the 3rd quarter. IHS/Markit (née Macroeconomic Advisers) informs me:

Stall warning
Key economic indicators covering labor markets, consumer spending, housing, and factory activity show that economic activity rose sharply over the May-June period, but alarming increases in COVID-19 infections, hospitalizations, and most tragically deaths have led some states to pause or roll-back steps to re-open and resume activities. The recovery in economic activity will slow and could stall in response to the intensification of the pandemic.

Here are two graphics that illustrate the concerns. First are nowcasts:

Notice that as we entered mid-June, Q2 forecasts fell and Q3 forecasts stopped rising.

This is linked with the pattern in Covid-19 cases and fatalities.

31 thoughts on “Nowcasting Q3

  1. Moses Herzog

    It’s awfully early to say, so this is NOT a 3rd quarter prediction. Way too early to be digging in my heels on that. But I would say just as a casual observationalist, if we are talking SAAR here (and my assumption is on IHS etc, we are always talking SAAR unless they specify otherwise) those 3rd quarter numbers are looking overly positive to my eyes.

    1. Baffling

      They would look much better if trump had a realistic and legitimate plan to reopen schools. He has had months to plan, and it looks like he simply wasted more time. The feds are in month july, and still have not conducted a thorough study of the disease spread in the general population. Still no thorough study of the disease spread in children in daycare. It is all haphazard work. Months wasted. Its almost as if the trump administration does not want to know the true status if the virus in our population. A disinformed populace seems to be the goal.

      1. Moses Herzog

        The people that donald trump has heading agencies, with the monthly turnover of incompetents, maybe in this case federal government assistance is a bad thing:

        With “friends” like donald trump, who needs enemies?? (There’s a lot of audible vulgarity in this Menzie, people might be advised to use their computer device’s mute or turn down the volume before clicking the link if they have children nearby)

        People can judge for themselves how violent the protesters were before donald trump’s Feds opened fire on them and violently struck them by hand.

      2. 2slugbaits

        I don’t expect Trump to have a detailed plan to reopen schools. That’s primarily a state issue. That said, Trump shouldn’t be standing in the way of the states doing the right thing. Trump should offer the resources of the federal government to assist states and school districts with the costs of opening up. Trump should not be threatening to defund federal support for states and school districts that don’t open up. Trump should be aggressively telling his GOP governors to mandate masks, which would go a long way towards making the reopening schools a reality instead of a pipe dream. Trump’s CDC could also publish a useful set of guidelines. Instead of doing something useful, Trump has been bullying Republican governors into supporting shortsighted policies that Trump (wrongly) believes will goose the economy while he pretends that the COVID problem will just magically disappear by November. If Trump really wants to see schools reopen in September, then he should be urging a lot of red states to return to a hard lockdown now.

        BTW, I believe Trump’s youngest son spells his name “Barron” and not “Baron.” We don’t know much about him (that’s a good thing…the media should leave minor children alone), but he seems like a well adjusted kid. It’s not his fault that he’s got a sociopath for a father.

        1. Moses Herzog

          Generally I agree on the public officials’ children being off limits thing, but I wager he’s going to be emotionally mixed up (through no fault of his own), but on a relative scale—much better socially/emotionally adjusted than Barron’s “half-siblings” (is that the right term??). More like a Mary Trump or a Tiffany Trump.

          He has no true father figure, and probably no replacement for that in his life. That stuff can get buried, but eventually the resentment comes out in some form or fashion.

          1. Willie

            It may sound harsh, but I do not cut any of them any slack. I have known plenty of people from less than ideal backgrounds who end up being reasonable humans. The Trump clan can whine all they want about affluence, but mostly they are just soulless and defective. The sooner they disappear, the better. Very few people think about Sarah Palin. Trump will kick and scream for attention. So did she. She has mostly disappeared now. Once the press can reasonably ignore him, they will. I personally look forward to it.

            And just to drive the point further – none of them matter to me any more than any of us matters to them. I want the Trump clan to disappear from our consciousness. Where they go and what they do with themselves is irrelevant.

        1. Willie

          What is amazing to me is that MAGA types have painted themselves into an impossible corner. The death toll will rise, whether it is reported or not. The economy will sink again in Q3 a governors decide that killing off their citizens is a worse choice than restrictions. And, even if the pandemic were easing in a way that it certainly is not, I find it difficult to believe that the economy didn’t have a dead cat bounce of sorts in Q2. If the GOP had gone after this problem in a more reasonable way, they would have enhanced their electoral position. Instead, tribal true believers now trust them, but that is about it. If the economy continues to flag, even the dead enders may rethink.

        1. Menzie Chinn Post author

          Moses Herzog: By convention, GDP growth and many components is SAAR. Lots of other macro variables are not always: CPI, trade balances from the balance of payments as opposed to NIPA, etc.

      1. Not Trampis


        Those nowcasts of -35 look anuuallised not annual to me.

        I could be wrong.

        1. Menzie Chinn Post author

          Not Trampis: SAAR in US means “annualized”, i.e., a quarterly rate of change if sustained for one year. If it were quarterly data and an annual change, we would call it “year-on-year”.

          1. spencer

            The way the annualized is calculated includes the compounding impact. that why you raise it to a power and not just raise the rate by 4 to get the straight rate.

  2. Baffling

    In memorial to john lewis. All congressmen should follow his example. The world changed because he took action. God rest his soul. Hero.

    1. pgl

      Amen to that. The proper way to honor this great man’s life is to have the Senate pass HR4 which would restore voting rights. Of course McConnell thinks his hollow words today is all Lewis deserves.

  3. Baffling

    And now trump is sending in an occupying force of masked unidentified mercenaries to kidnap citizens in portland. Sounds more like the soviet union than usa. Dick striker must be proud of the authoritarian approach to democracy.

    1. pgl

      It is incredible how the Trumpsters are defending these Gestapo tactics. Expect a lot more of this from Attorney General Herman Goring.

    1. Baffling

      Not by accident, trump is promoting white beans. Not black beans or brown beans. This is intentional.

      1. pgl

        I just looked at the picture of him again and by God you are right. Now anyone who gets Mexican cooking would go for black beans. But Trump only knows Taco Bell. I bet he also eats only white bread.

        1. Moses Herzog

          Don’t forget he says he likes ketchup on steak. I suspect some of this is just an attempted appeal to white trash. There was also the story about him and Sarah Palin eating pizza with forks–keep in mind this was years before COVID-19. Would have been before November 2016 obviously. I’m pretty paranoid about germs and even I use my hands on pizza after washing with anti-bacterial soap. I don’t eat anything after my immediate relatives have eaten it, and have only ever eaten/drank after one person when we were both drinking alcohol. The only other exception would be with Chinese people when they used their own chopsticks out of a serving dish,, but what the hell exactly was I supposed to do there??

  4. Moses Herzog

    This is similar to the Catholic Church stunt that donald trump did in Washington D.C. These federal thugs where not requested by Oregon’s state government or the city of Portland.

    Does ICE and federal agents completely unidentified with no badges and no identifying marks on their vehicles sent by donald trump remind you of anything??

    This is not even a slight exaggeration to compare trump to Hitler at this point, this is at the very least the second time he has sent federal agents with no identification, no idea what agency they represent, and attacking peaceful U.S. citizens. donald “bone spurs” trump got away with attacking citizens near a Catholic Church in D.C. and now he’s trying the next stunt while Mitch McConnell sits in a Senate broom closet jerking himself off.

    Where Is Pelosi?? Busy eating ice cream??

      1. Moses Herzog

        My apologies, I stand corrected. I guess the female Bishop should have been my first clue, so that was a pretty bad error on my part.

    1. pgl

      Moses – maybe you missed this as the NY Post reported on Pelosi’s statement:

      House Speaker Nancy Pelosi is accusing the Trump administration of using federal police to “kidnap” protesters in Portland — likening their arrests to “banana republic” tactics.
      “Last month, the Administration tear-gassed peaceful protestors in Washington, D.C.,” she wrote in a joint statement Saturday with Oregon Rep. Earl Blumenauer.
      “Now, videos show them kidnapping protestors in unmarked cars in Portland – all with the goal of inflaming tensions for their own gain,” the statement said.
      “While Portland is the President’s current target, any city could be next,” the statement added.

      1. Moses Herzog

        “released a joint statement”. That must have been rough going. Do you think she had to retouch her make-up during that??

        Even Lindsey Graham can get his big only-a-mother-could-love ugly buttmunch face out for the Sunday shows. She could stand in the background and let a real communicator like Ocasio-Cortez discuss it at a podium. Joint statement means “I’m busy at the salon, here’s your token message of my ‘heartfelt’ concern”.

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