36 thoughts on “GDP Nowcasts, June 26th

  1. pgl

    But that’s a 10% drop annualized, isn’t it? Let’s hope real income keeps dropping this brutally all year.

  2. Not Trampis

    for those of us who only speak english what is a nowcast. from what language is this word taken from?

      1. Not Trampis

        Thanks. whatever happened to old fashioned forecasts.

        good to see SAAR used and not that annualised rubbish though

        1. Menzie Chinn Post author

          Not Trampis: SAAR means “seasonally adjusted at annual rates, so is annualized. Do you mean they are not anual (year-on-year) changes?

          1. macroduck

            A good many political forecasting models which have economic data as inputs rely on year-over-year change. Economists tend to use a variety of comparisons across time (something to do with analysis), but voters, at least as they are modelled, are interested in changes (real and expected) from about a year ago. For whatever that’s worth.

          2. Not Trampis

            too right. most countries have SAAR meaning say This June quarters figures compared to the June quarter last year.

            Why do you yanks use annualised figures for GDP but not anything else.
            I guess an annualised CPI would be more meaningless than the figure for GDP but not all that more

      2. pgl

        As opposed to backcasting – a planning method that starts with defining a desirable future and then works backwards to identify policies and programs that will connect that specified future to the present. The fundamentals of the method were outlined by John B. Robinson from the University of Waterloo in 1990.

        This is a concept foreign to the current folks in the White House. Voters take heed – if you want a real economic recovery without massive deaths from COVID-19, step one at getting towards these goals is to make sure we elect a new President.

  3. Moses Herzog

    I find myself “revisiting” this issue of the big differences in the NOWcasts (probably indicating I didn’t “study up” or “read into” it as much as I should have the last time). Well, as Menzie has wisely suggested before, if you take the 3 NOWcasts and get a median or mean number, or some kind of “mathematical middle ground” you might find yourself with a pretty good number—while still scanning the horizon for other factors/numbers to “tweak” it if you like to play amateur economist like I do. Right now I don’t have enough certainty to make a GDP prediction (When do the next official numbers come out?? Anyone want to tell this lazy guy??). But I will make two “side” predictions, which in my opinion aren’t that deep—i.e. I think they are obvious:

    1) We are not going to have a V-recovery, and that’s been obvious for weeks if not months. (I have stated this before on this blog, at least a month ago)

    2) The 2nd Quarter GDP numbers will be lower than 1st Quarter GDP numbers—and this includes if there are downward revisions in the 1st Quarter numbers.

    Those two things I feel very confident in saying. Maybe I will make a amateur’s GDP prediction soon if we still have a few days to toss out a number.

  4. macroduck

    If my math is right, the GDPNow estimate for Q2 implies that personal consumption will account for 71% of total GDP, topping the highest share on record by a little over 2%. That increase is expected at the same time that real personal consumption is expected to fall at a 38% annualized rate. Transfers to households are part of what make an increased role for consumer spending possible. It is not too late to keep that policy going, and the welfare loss implied by the drop in consumer spending seems reason enough to spend the money.

    While bad will and stubbornness may be enough to prevent Trump and the Senate from extending federal jobless benefits, the upswing of Covid infections in the south and southwest could change that thinking. Now that the liberal hell that is the Northeast is mending and Trump voters are getting sick, selfishness and stubbornness may, in some limited circumstances, lead to good policy.

  5. rjs

    we already have 46% of 2nd quarter GDP on the books with the release of May’s PCE…the Atlanta Fed’s forecast 39% decline will be almost impossible to meet..

    these are the inflation adjusted (2012 dollars) figures in millions for personal consumption expenditures for the months October through May
    13,388.3 13,419.9 13,433.2 13,471.6 13,463.2 12,602.0 11,062.2 11,954.8
    that came from table 7 in the full release and tables pdf, which one accesses through the report’s main page

    those figures represent ~69.4% of GDP for each month, and the BEA computes the quarterly change in PCE from a simple average of the 3 months in the relevant quarters….
    hence, the 1st quarter saw PCE fall at a 6.8% rate, which accounted for 4.7 percentage points of the 5% drop in the 1st quarter’s GDP…
    here’s the math for the 6.8% 1st quarter drop in PCE:
    1- (13,179.0 / 13,413.8 ) ^ 4 = 0.06820

    hence, by averaging the 2012 dollar figures for April and May, 11,062.2 billion and 11,954.8 billion respectively, we can get an equivalent annualized PCE for the two months of the 2nd quarter that we have data for so far….when we compare that average of 11508.5 billion to the 1st quarter real PCE representation of 13,179.0 billion, we find that 2nd quarter real PCE has fallen at a 41.85% annual rate for the two months of the 2nd quarter we have data for at this point…(again, here’s the math used to get that annualized contraction rate: 1 – ((( 11,062.2 + 11,954.8) /2 ) / 13,179.0 ) ^ 4 = 0.418506)….that’s a pace that would subtract 29.06 percentage points from the growth rate of the 2nd quarter, with that computation based on the unlikely assumption that there’d be no improvement in June PCE from the April-May average; any improvement in June, and the hit from falling PCE will be less…

    April and May’s trade figures are worse than those of the first quarter, so that could clip another percentage point or two off 2nd quarter GDP…but that hit should partially be offset by residential construction and inventories; not that inventories will be strong, but that they were hit so badly in the 1st quarter they don’t have much more to give…so i can’t see the 2nd quarter being any worse than -30%, with an outside possibility it could come in as high as -20%..

    1. Barkley Rosser

      “Possibility” it might be as high as -20% for second quarter? It now looks like consumption is highly likely to be positive for the second quarter kills any chance of overall GDP growth for the second quarter being -20% or lower. Heck, I would be very surprised if it is lower than-10%.

      1. rjs

        Barkley, did you follow my math here? i was doing the same computation the BEA will be doing…how can you get from a 42% PCE contraction rate over April and May to something on the order of a 15% contraction after including June (which it would need to be for GDP to come in at -10%) do you expect June PCE to double from May levels?

      2. Moses Herzog

        It’s nearly (I said nearly) become the funnest part of this blog, to watch Barkley Junior have the faith/conviction in his own complete idiocy, to finally stick his neck out with statements like “Heck, I would be very surprised if it [2nd Quarter GDP] is lower than -10%.” Kids, do I need to inform you that Uncle Moses is going to enjoy this??— so much when those 2nd Quarter GDP numbers come in, and Junior either takes an “extended leave” from the blog, or tries to pretend these permalinks do not exist. Are you thinking that Uncle Moses will link back to the above comment when that number comes out??

        1. Barkley Rosser


          I have no doubt that if I am way wrong, which is certainly possible (note that I have avoided making any definite forecast and have repeatedly empahsized how uncertain both our data and our models are right now) you will have a grand old time and will probably end up boring everybody to tears here by repeatedly reminding everybody of how wildly off I was in the face of so many forecasts of varying degrees of negative growth for the second quarter.

          To those who are wondering how there might be posttive growth in the second quarter when we continue to have well over a million new layoffs per week, keep in mind that this economy is now experiencing wild sectoral differences in what is happening. While some sectors have seen rapid growth and hiring, from construction to dentistry, we continue to see some declining sharply with layoffs continuing, with state and local governments at the top of the list. Also note that while layoffs continue to be way above their more normal 200,000 per week level, they have been steadily declining since some time back in April.

          Also keep in mind that we have already had one big “surprise”: pretty much all of the major forecasters said there would be large increase in unemployment for May, but that turned out to be simply wrong; we had an over 2% increase in employment. But it is these same forecasters who are now arguing over whether growth for the second quarter will be worse than -20% or only worse than -10%. I have seen only fragmentary evidence that some of them have actually noticed how far off they were on those May employment forecasts. None of them, I repeat, none of them saw the increase in net hiring that happened.

          I also repeat that while I made no forecast on that, I had been reporting evidence the US economy had bottomed out not later than the end of April, so I was not at all surprised to see that increase in employment. We may still see a decline for the second quartet in growth, especially as things are going gonzo here in late June (my last Econospeak post was on how the apparent V-pattern may be flattening out). But I shall be super surprised if we see -20% growth and somewhat surprised if we see a double digit decline.

          To Moses, also keep in mind that at one time was agreeing with you that there would not be a V-shaped pattern, although I kept chanigng what to call the pattern. But then data emerged showing we might have at least a short term V, maybe for May, which I now think may be flattening, with all of this me simply responding to ongoing new reports of data, whereas those forecasting sharply negative grwoth are using models, I guess similar to the ones that failed to foresee the growth in employment in May. You are sticking with your forecast of sharply negative growth for the quarter, but I do not see you citing any data to support your forecast, and suspect you are partly hanging onto it simply because I have changed my tune, and you want for strcitly personal reasons to find me weong. Well, good luck on that one. I just call it as I see it.

  6. Moses Herzog

    Menzie, I tend to agree with the more negative views on 2nd Quarter GDP—certainly that it will be worse than the first quarter. But it does pay to look at many different sources. CBO’s GDP on an annual rate is negative 39.6%. How much weight do you personally put on CBO numbers??? For example do you respect CBO compared to some of the better known private forecasters?? I should add that number was posted in late April (YES, 2 months old) and I do not know if CBO has updated that. It is fascinating that CBO’s late April quoted number is only a single decimal point off from the NYFRB NOWcast.

  7. rjs

    @Moses, GDP reports are released during the last week of each month, except for in December, when they try to get the 3rd estimate of the 3rd quarter done before Christmas…the first estimate for each quarter is released at the end of the month following the end of the quarter, which in the case of 2nd quarter GDP will be on July 30th…at the time of that release, June construction spending, June international trade, and June inventory data will not yet have been published, although the census does put out sketchy “advance” data on trade & inventories a day or two before the GDP release…the greater uncertainty is in PCE services, which accounts for 47% of GDP, because the quarterly services report is not released until another month and a half later….that sometimes will result in a large topline GDP revision with the 3rd GDP estimate for the quarter..

    1. Moses Herzog

      @ rjs
      Yeah when I looked at BEA it looked like July 30th was the next big one—-I’m even VERY happy to wait for the more accurate revised number when Barkley sees the earliest number and starts grasping for low tree branches when he realizes he’s up to his pelvis in quicksand. But I’m grateful for the detailed breakdown as I was (yes shamefully) not quite sure all the timing details on that. Much appreciated.

      1. Barkley Rosser

        BTW, Moses, I realize that you think I am going to be all covered in shame and woe if it turns out that indeed the nowcasts are right and the US has a fairly substantial decline in GDP for the second quarter, shame on me, not to mention, wow, my pelvis in quicksand (why on earth are you coming up with such bizarre and overtly sexual imagery might I ask?). No, rather as somebody who really wants to see Trump defeated, I shall cheer that this means it is much mor likely he will be defeated because he will not have his “great economy” argument for reelection, about the only one he hopes to have.

        So, sorry, Mose, but I do not promise to be miserable if you get to cheer and jeer at me being way wrong about what is going on in the US economy.

        1. Moses Herzog

          No, I’m proud of you Junior, don’t back down now!!!! We all know you get “buyer’s remorse” very quickly and change your thoughts with the wind. But we’re going to hold you to this one. After all your insults and false accusations towards Paul Krugman and other respected people in the economics field, now I wanna see if Emperor Barkley has any clothes. Think of your recent call on 2nd Quarter GDP as your “shining moment” Junior. Embrace your inner Barkley.

          1. Barkley Rosser


            “Insults against Paul Krugman”? What are you talking about? My ancient pointing out that he did not give proper credit to Masahisa Fujitaa for having beaten him to the punch on applying the Dixit-Stiglitz model to urban and regional economics? That is simply a fact. He did not until he very grudgingly did so partially nearly two decades after the fact in his Nobel address. This is old hat stuff, Moses, and you will simply look silly yet again if you drag this stuff through the mud further. Do you really wish to republicize what is essentially an embarrassing episode for Krugman? I think you should leave well enough alone. This is all really ancient history at this point..

            Actually, looking closely at what Jim Hamilton has posted here, theere is an odd way to see the possibility of positive second quarter growth GDP growth from it, although it is certainly odd, or at least a near zero forecast. The way to do it is to take the benchmark blue chip forecast, which only goes to June 5 and add to it the forecast coming from the Atlanta FedGOPNow. This looks even more like a near zero outcome, probably slightly negative, if one looks at the change from April 3.

            So from April 3 to June 5, looking at the mid-range blue chip estimate what one sees is a -10% decline with no turnaround as of that point. However, the Atlanta Fed GOPNow forecast, which goes beyond then, although only going from April 3, has a turnaround and positive growth for June after around the 5th, although it is a little hard to pin down exactly how much it is shown as rising. But it looks to be somewhere between 10 and 15%, depending whether one goes from the bottom most point or just after its initial jump, which looks to coincide more precisely with that June 5 endpoint of the conssensue blue chip line. If indeed what happens is that there is sometihing like a say a 1-12% decline as indicated by the blue chip from the beginning of April to early June with that followed by a 10-15% increase for the rest of June, well, that ends up being either a bit below or a bit above zero, certainly not anywhere near the much more negative forecasts being tossed about.

            Of course what I am doing there is quite bizarre given that the consensus blue chip estimate, which is much smoother and more gradual .does not resemble the Altlanta FedGOPNow forecast, which falls much more deeply, even as it shows a rather irregular rebound in June after the endpoint of the blue chip one. There are lots of arguments that what I have just suggested is completely ridiculous and inappropriate. But it holds if the blue chippers have the decline right while the Atlantans have the rebound right.

            Certainly, if the Atlantans are right overall, they have a decline from April 30 to late June of something on ehe oreder of -27%, with the economy ending up at around -40% for the year. Curiously, if we simply project the blue chipo estimate forward at the same rate of decline as it was exhibiting, it looks to end up at about the same final point for the year, a decline of about -40%, which would have them projecting a -15% grwoth rate ffrom April 3 to that near end of June point Atlanta goes to. Those are quite different numbers, but do look like the sort of range we see many now arguing over, back to whether ot not it will be worse that a -20% decline for the quarter or not.

            But, of course, the blue chippers may agree that there was a turnaround in early June, but quite likely their consensus model would have a less rapid increase in GDP from that point. than the much more volatile Atlanta group are arguing. If so, that would suggest that it is highly likely that this would not be sufficient to offset the -10% they see from April 3 to June 5, leaving the second quarter growth negative, but a decline that is not as sharp as -10%, in short, a single digit decline.

            So, based on that, it actuaally looks to me like a very reasonable prediction based on highly likely behavior of the blue chiop consensus model would be for a net decline by some single digit amount. This actually looks highly likely, especially given all the evidence out there that indeed growth has been going on in major sectors of the economy such as consumption. Guessing that in the end the blue chippers will be projecting a single digit decline for the second quarter is fully consistent with my view that it will be “highly unlkely” that we shall see a second quarter decline worse than -20%, despite what the Atlantans appear to forecast, and that it will even be “somewhat surprising” if we see a decline worse that -10%, although I have not said there will definitely be positive growth, only that it would not be all that surprising if indeed it happened. And indeed, if one looks at the range provided by the blue chippers, it exceeds 10%, so that if the mid-range forecast is for a single digit decline, then a greater than zero outcome will be within their range, thus somewhere between 55% and 50% probable.

            This looks extremely reasonable to me, although clearly there are huge differences between these models. Heck, the Altanta model has GDP down about -54% for the year at its projected bottom point for early June, which is lot lower than the blue chippers have it reaching, a mere -35%.at that time. That amounts to a difference between them of 19%, which is simply enormous.. But the bottom line is that indeed when it all gets played out, the blue chip mainline forecast will be for a single digit decline with a nontrivial chance of the final outcome for the quarter being slightly positive.

  8. Moses Herzog

    I am way way way way too lazy to hunt it down, but wasn’t someone in a prior Econbrowser thread asking how the recent Federal Expenditures (related to unemployment) were going to effect GDP?? Or maybe they were making a query related to the Federal Reserve’s purchasing of bonds (corporate and otherwise)?? I read a decent amount and it all starts to kind of get jumbled. On the chance this answers someone’s question I am sharing this link:

    Also BEA have a post on the Paycheck Protection Program and how that effects calculations:

    1. rjs

      Moses, “Federal Expenditures (related to unemployment)” do NOT effect GDP until those benefits are actually spent by the recipients for goods and services, indicating an increase in the output of said goods and services..

      (& said spending is later adjusted for inflation, imports and inventories to result in the actual increase in the quarter’s domestic output of goods and services)

    2. Baffling

      I question how much the ppe deflated the unemployment numbers.
      As a side note, trump now oversees a nation where nearly half the population is not working. Maga!

  9. Barkley Rosser

    Given that Moses is insisting on me now sticking to my numbers so he can throw me into a pit of quicksand up to my pelvis if I am wildly wrong, let me correct two places where I typoed numbers. So near the end of the third paragraph I inaccurately said the blue chip estimate for the quarter to June 5 was 1-12%. That should read 10-12%. From April 3 to June 5 they clearly have it as 10%, going from -25% to -35% for the year. The extra possiblre 2% is for the beginning of April.

    The other correction is in the last line of the next to last paragraph. So the probability of positive growth for the second quarter should read 5-50%, not 55-50%, which is a silly typo. I don’t want to have quicksand on my pelvis over typos.

  10. Barkley Rosser

    Oh dear, I have to correct my numbers again, although the net endpoint is not particularly changed, a highly likely single digit decline for the second quarter, with maybe about equal chances of it being positive or on the downside a decline slightly worse than -10%, but with a decline of worse than -20% highly unlikely.

    My error was calling the blue chip estimate from April 3 to June 5 a -10% decline. It is more. It goes from 75% of the Jan. 1 level to 65%. That is actually a -13.3% decline. Ooops! But then if there is a turnaround, the correction goes the other way. So if indeed my weird scenario of the increase after the turnaround, which has indeed clearly happened even if is now stalling out some as I have forecast, for the Atlanta model goes from 46% of Jan. 1 to about 60% of Jan. 1 from the low point in early June to the last point shown in late June. That would be a rebound of 30.4%, which is humongous.

    So, will stick roughly with my endpoint ranges, but some of the specific numbers along the way in my long post above were insufficiently negative on the way down, but then insufficiently positive on the way back up.

    Oh, and clearly the US economy will still be down for the year. While growth might be positive for the second quarter, it will not be sufficiently so at all to offset the decline experienced in the first quarter, ot at least since the economy’s peak around the end of February.

  11. Barkley Rosser

    I am going to add just one more comment here, something I think rjs has already agreed to, but gets to what got me going on all this stuff in the first place, especially as I am one who usually avoids making very specific forecasts. Heck, I already have quicksand all over my shoes, if not more, because I joined in with so many others in ridiculing the idea that there might be a “V-like” immediate bounce after the economy hit bottom. It now looks increasingly like it did just that, even as I and others suspect that will not continue for a variety of reasons. But then it is because I have admitted I was wrong about the unlikeliness of an at least short term V-bounce that has Moses declaring that I am headed for the quicksand more seriously (or am an Emperor about to be shown to be without clothes, oh dear).

    So I am looking again at these Nowcasts that Jim has posted here. It is indeed pretty clear that the Atlanta one’s analysis of what happened in May to GDP is simply impossible, given recent data. This figure only starts at April 30, with the level at that point at about -12% below whatever is the 100 reference point (actually not clearly defined there, near as I can see), which we can translate to about 88%. By about or just before June 5 it is down to about -56%, a whopping amount, which we can call 46%. This period is basically the month of May, with a few days added on the end at the beginning of May.

    Going from 88% to 46% is a 47.7% decline. But we know that consumption is roughly 70% of GDP, and we now have an initial estimate that it rose in May by over 8%. It is simply arithmetic that even if every other component of the GDP were to simply crash to zero, there is no way one would get at -47.7% change in GDP for May.

    Again, what got me going on all this was the massive mistake on employment by basically of the official forecasters for May. Most of them were forecasting declines in employment in the neighborhood of 115 to -20%. But instead there was an increase in employment of over 2%. This is a huge blunder.

    I remind everybody that in general employment and output are very closely correlated in the short run, although these are strange times with normal relationships breaking down, and also the possibility that the data itself is inaccrurate or misleading. Nevertheless, assuming any sort of resemblance to normality this reported increase in employment would be associated with an increase in output as well, if not one for one. This was and remains the opening shot for why we should expect May output to rise from April, even if its increase and one in June are insufficient to offset the sharp decline that happened in April. But then we see all these forecasters posted here by Jim appearing to show declining output in May, both the blue chip one (not by an impossible amount) as well as the apparently impossible one from the Atlanta group. I am simply mystified that they seem to be ignoring reported data on what went on in May.

    1. Menzie Chinn Post author

      Barkley Rosser: For the sake of accuracy, I note that I, not Jim, posted the nowcasts of 26 June. He bears no responsibility for citing those estimates (I did refer readers to his explanation for why GDPNow and NY Fed nowcasts differ).

      1. Barkley Rosser

        Oh, sorry Menzie. I see how I got confused. I had originally thought you had posted it and then saw the reference to Jim, so then thought he had. I am pretty careless and sloppy about a lot of things, as you all well know.

        BTW, I came here to post something about Jim, and so will, even though he is not the person behind this thread.

        I was on the awful Economics Job Market Rumors (ejmr) a bit ago. There was a thread entitled “Who are the ten most important living time -series econometricians?” I did not look at all the comments, but the original list given by the Original Poster had the following at the top three, for whatever it is woeth: P. Phillips, L. Hansen, J. Hamilton.

        So there.

      2. Moses Herzog

        @ Professor Chinn
        Do you know how often Barkley Junior reads his Frankel??

        “It is no secret that measures of employment fell sharply from February to March. Real (inflation-adjusted) personal consumption expenditure (PCE) and real personal income before transfers both peaked in February as well. Official measures of GDP are released only quarterly, but the economic free-fall in late March was enough to pull first-quarter GDP growth down to an annualized rate of -4.8% (relative to the last quarter of 2019).
        Though the NBER is a private non-profit research institution, its chronology holds official status, as affirmed by the US Department of Commerce’s Bureau of Economic Analysis (BEA). And every time its Business Cycle Dating Committee declares a turning point for the US economy, people wonder what took it so long. But the four-month lag between the event and the committee’s latest declaration was the shortest since its founding in 1978. For the US economy’s ten cyclical turning points since 1980, the average time lag had been 11.7 months. The committee’s relative speediness this time is a testament to the unprecedented suddenness of the pandemic-induced collapse.
        Readers are often surprised to learn that the task of declaring a recession in the US falls to a panel of economists who consider a wide variety of indicators. Most other advanced economies, after all, define a recession as simply two consecutive quarters of negative GDP growth. But the US isn’t the only country to go beyond the two-quarters rule. The Japanese government also considers other indicators in its official business-cycle chronology. And private committees in other domains – including the eurozone, Canada, Spain, and Brazil – date business cycles by looking at a wider variety of economic indicators, though without garnering as much attention from the media or official government bodies.”

        Frankel continues on:
        “…….. The NBER’s latest declaration is an example of how it helps to be free of the GDP rule. We can be confident that data from the second quarter of 2020 will show a plunge in US output that is even larger than that of the first quarter (perhaps 40% when annualized). But this second quarter of negative growth will not be verified until the BEA’s update on July 30. And even that number will be only an advanced estimate.’

        I think Junior needs to extend the breadth of his reading materials. Is that a “fair assessment” Professor Chinn??

        1. Barkley Rosser


          There is nothing in this comment by you that I am unaware of. I do not know why you thought you needed to bold everything. This just makes you look stupid, sorry.

          As it is, yes, Frankel is indeed on the list of “authorities” I am challenging regarding these projections of a massive GDP decline in second quarter. I know that you want me to be a “Real Man” and give you some number (you do not provide a number yourself, non-Real Man), so that if I am wrong you can trumpet it here for the foreseeable future over and over. So, I have gone out on a limb and said that I shall be “very surprised” if there is a decline more negative than -20% for the second quarter from the first one. If that heppens, I shall dive into the nearest pile of quicksand head first, but I shall not take a “vacation” as you did in some sort of shame. I shall swim down to the bottom and out the other end, holding my breath, and simply accept that I was wrong.

          I remind you that when I am wrong, other people do actually show up to agree with you on the rare occasion you actually do catch me being so. The last one was when I committed the awful sin of misspelling the last name of Ronald McKinnon, and indeed I think both pgl and 2Slugbaits showed up to agree with you. I was indeed wrong about that, but did not take a vacation. Anyway, we shall see about the second quarter, although it will probably be over another month before we have any seriously reliable numbers about GDP figures for the second quarter.

          1. Moses Herzog

            @ Barkley Junior
            Your comments on 2nd Quarter GDP are already on record, and they will be linked back to at the appropriate time. Probably when the BEA number comes out. And I’m more than happy to embarrass you again when the 2nd Quarter revision comes out as well. No worries on getting your pie in the face twice. There’s even a chance I may deride you more than that. You’ve made my entire month of July just looking forward to this. It’s nice of you to give me this bright bouquet in the middle of the dreadfully hot summer.

          2. Barkley Rosser


            It will be a long time before the second quarter number is out, not in July at all. We still do not have a GDP estimate for May, probably because we do not have estimates on net exports. Those are always slow to come in. Of course monthly estimates are not official BEA ones, because they only do GDP quarterly. But indeed I have still seen no trade numbers for May, not have I seen ones on government activity, which we all expect to be negative for May. We do have figures for consumption in May, which was up a lot, and also for the construction part of investmeent, which was also up a lot, although other parts of investment, especially inventories, might be down.

            There is also some confusion over whether we are talking about actual changes in GDP or annualized rates. Looking more closely at what Menzie has posted it is now clear to me that what all this is are in fact forecasts of annualized rates, which look more dramatic than actual changes. Thus I have now seen estimates for the month of April. Estimates have the actual decline in GDP for the month to be about -11.4%, but that translates into a -42% annualized rate, which looks a lot like some of the forecasts that Menzie posted here, although most of them are in the negatibve 30s. I am not quite sure what those annualiized rates for the quarter translate to as actual declines, but they would be much less severely negative numbers.

            The one that seems to be forecasting not much of a decline is the New York Fed, which is coming in at an annualized rate of -16.3%, a sharp contrast with the others that are mostly in the -30s. That NY Fed forecast would clearly imply a modest negative single digit decline in GDP over the quarter, although I do not know by exactly what amount. That is much closer to what I think is likely.

  12. Barkley Rosser

    Oh, needless to say, if the April GDP is -11.4% and we see positive growth in both May and June, which looks highly likely, then the second quarter GDP decline will not be as negative as the 11.4% for April, which would mean that my expectation that we shall not see a GDP decline more negative than -20% will be fulfilled, whatever the annualized rate turns out to be. My -20% cutoff is a GDP change, not an annualized rate change.

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