Nowcasts Down

Atlanta and NY Fed lower growth rates for Q2

Figure 1: GDP as reported (bold black), GDPNow (light blue square) , NY Fed (pink triangle), Survey of Professional Forecasters May median (light green line), all in bn.Ch.2017$, SAAR. Source: BEA (2024Q1 2nd release), Atlanta Fed, NY Fed, Philadelphia Fed, and author’s calculations.

For a first, the implied level using GDPNow is below the May SPF, a result of downward revision in Q1 GDP and slower nowcasted growth.

The downward movement in nowcasts is pronounced. Consider GDPNow.

Source: Atlanta Fed, accessed 3 June 2024.

The downside surprise on construction and ISM manufacturing was the big mover — from 2.7% to 1.8% q/q SAAR in GDPNow. Goldman Sachs tracking only dropped 0.1 ppts by comparison.

That being said, no recession is apparent in Q2 nowcasts yet. Nor in monthly indicators for April (see here).



35 thoughts on “Nowcasts Down

  1. Not Trampis


    you are hopeless. The US has been in recession since Biden was President. I have that ob very good advice from a convicted felon

    1. Moses Herzog

      @ Not Trampis
      That’s it!!!! You’re finished…… next time MAGA has a VP hanging jamboree, you’re not invited.

  2. Moses Herzog

    I trust my gut (for the most part). I don’t have a strict “model” (mathematical or orthodox). I just look at the general data and try to get a “vibe”. I believe strongly consumer spending will drop between now and September. We’ll see where the chips fall.

  3. Ivan

    ISW covers a very important story that has gained little attention so far. China has Putin trapped on the natural gas issue and they are not going easy on him – demanding prices near Russias own subsidized domestic prices and refusing to commit to a lot of long-term purchases. From a Chinese domestic angle that is understandable. Their conversion to alternative energy has gone faster than expected and they don’t want to lock themselves into expensive Russian hydrocarbon – both for reasons of cost and also to avoid being dependent on Russia.

    “The People’s Republic of China (PRC) and Russia are reportedly in disagreement about economic issues such as the proposed Power of Siberia 2 (PS-2) pipeline despite publicly portraying themselves as diplomatically aligned. The Financial Times (FT) reported on June 2 that three unspecified sources familiar with the matter stated that the PRC and Russia disagree about the details of the PS-2 gas pipeline, with the PRC wanting to pay prices near Russia’s subsidized domestic gas prices and to only commit to buying a small part of the pipeline’s planned capacity.[5] Gazprom Head Alexei Miller reportedly did not accompany Russian President Vladimir Putin on his recent visit to the PRC due to these disagreements over the pipeline. FT reported that Putin asked PRC President Xi Jinping during their May 2024 meetings to come to an agreement on the pipeline, but FT reported that sources said that a pipeline agreement “remains distant.” FT noted that Russia needs the pipeline to launch as expected more than the PRC. FT reported that it gained access to an unreleased report by an unspecified major Russian bank that stated that if the PS-2 pipeline does not launch in 2029, Gazprom’s profits are forecasted to drop by almost 15 percent, which is especially significant following Gazprom’s $6.9 billion loss in 2023, its largest loss in more than 25 years. FT, citing a recent report by Columbia University’s Center on Global Energy Policy, also stated that the PRC will mostly or entirely be able to meet its projected increased demand for imported gas with existing supply contracts until 2030, but that the PRC’s demand for imported gas will exceed the capacity of its existing contracts by about 150 billion cubic meters by 2040.”

    1. Moses Herzog

      I read ISW but I have to embarrassingly confess I sparingly read it (laziness and SO MUCH on my reading list). I greatly appreciate you finding this and sharing this. and the rent seeking collusion story farther below. Really both great catches and great shares. Bravo!!!~~and appreciated.

      We got some sharp contributors on this blog. I keep trying to drowned them out but there’s only so much a goofball can do.

    2. Ivan

      Todays ISW report highlight the substantial advantage of Ukraine in drone war capabilities. The Russian advantage in number of troops seem to be countered by Ukraines quantitative and qualitative advantages in drones. This is becoming a drone war and Ukraine has build impressive capabilities. Good thing nobody fell for the Russian propaganda that it was all over for Ukraine and they better surrender.

      Select Russian military commentators continue to complain about superior Ukrainian drone and electronic warfare (EW) capabilities on the battlefield, continuing to highlight the rapid and constant tactical and technological innovation cycles that are shaping the battlespace in Ukraine. A Russian milblogger who formerly served as a “Storm-Z” unit instructor posted a list of complaints on June 4 detailing the challenges that Russian forces face in repelling Ukrainian drones and claimed that effective and pervasive Ukrainian drone use is now the “leading factor” in Ukraine’s ability to repel Russian offensive actions.[1] The milblogger made six points about the Russian-Ukrainian drone disparity, claiming first and foremost that Ukrainian troops have a large numerical advantage in first person view (FPV) drones and FPV drone operators. The milblogger claimed that Ukrainian assault groups have a 3-4:1 FPV drone advantage over Russian assault units, while Ukrainian mechanized groups have a 6-10:1 FPV drone advantage over comparable Russian units. The milblogger noted that Ukraine also has specialized and centralized drone units within existing Ukrainian ground units, which allows Ukrainian forces to better integrate reconnaissance and attack drone capabilities into basic tactical maneuvers. Russian forces, by contrast, lack the centralized and organized drone-unit system and adequate EW and electronic reconnaissance (ER) capabilities to counter Ukrainian drones

      1. Moses Herzog

        @ Ivan
        Extremely interesting. Especially in light of the fact, did we not hear Russia was going to be supplied by Iran on drones and this also would be a possible Russian advantage?? Ukrainians are smart and resourceful. Will they perform great despite America’s Republican party attempting to wipe them out by tying their hands and constraining them?? And will the brave Ukrainian military fighters be allowed to punch back into Russian territory after being punched by Russia???

        1. Ivan

          Current reports on the Iranian Shahed drones (now also being produced in Russia) is that the Ukranians are downing 90-100% even during massive attacks. Their main problem is with glide bombs which can carry much bigger payloads and are harder to take down. Russias supply of missiles and long-range drones is very limited, but bombs they can put wings on are still plenty and being used for frontline attacks. The type of drones that Ukraine has a 5:1 advantage on is the small battlefield drones where a soldier sits in a protected “hole” and gets visuals on enemy positions, then either direct artillery fire, or drop a small payload directly onto the target. That has allowed Ukraine to fight off the Russian “meat grinder” assaults, neutralizing Russian advantages in numbers of soldiers.

    3. Ivan

      A follow up from ISW on the issue of hydrocarbon export.

      “Russian state-owned gas company Gazprom reportedly assesses that it is unlikely to recover gas sales it lost following the start of Russia’s full-scale invasion of Ukraine, illustrating how Western sanctions are achieving some long-term impacts against Russian revenue streams supporting Russia’s war effort. The Financial Times (FT) reported on June 5 that Gazprom’s leadership commissioned a report at the end of 2023 on the long-term prospects for gas sales, which found that Gazprom’s annual exports to Europe by 2035 will average 50 billion to 75 billion cubic meters — roughly a third of its annual exports to Europe before the full-scale invasion.[49] Gazprom reportedly noted that a new pipeline to the People’s Republic of China (PRC) aims to offset lost export volume to Europe but will only have the capacity to transport 50 billion cubic meters of gas per year.[50] Russia has relied on oil revenues to buoy federal budgets amid increased spending on its war in Ukraine, and long-term constraints on other energy exports will likely limit additional significant sources of funding for the Kremlin.[51] Russia has managed to rely on oil revenues to support a record level of defense spending in 2024 by engaging in a concerted effort to circumvent the G7’s price cap on Russian oil and petroleum products.[52] The West is expanding sanctions to curtail Russian efforts to skirt the G7 price cap, and significant constraints on Russian oil exports could also achieve substantial impacts on Russian state revenue.[53]”.

      I would add that Europe is substantially shifting its energy use towards alternative energy. So even if we imagine a situation where everything goes back to normal, Russian sales to Europe are unlikely to get back to anywhere near where it was. It would also have to be sold at significant discounts (like China is demanding) in order to compensate for the political risk. So the actual profits from hydrocarbons are likely to get reduced substantially – and that is a problem when a country essentially is “a gas station with nukes”.

  4. Ivan

    Nice to have a President that is willing to investigate collusion to keep rent prices up:

    Anti-trust laws have been poorly enforced for decades and fell to basically nothing during Trump. Nice to have a competent President who is working for the regular people not just those who can provide million dollar bribes/campaign contributions.

  5. Moses Herzog

    Not sure what to make of this: <<<—EIG claim they are “non-partisan” but staff/team includes Glen Hubbard, Kevin Hassett, and Ken Rogoff. ALL people who support (openly or clandestinely) artificially low wages for American workers

    1. Macroduck

      Oh boy. You found a couple of stinkers, each for its own rotten reason.

      The link to “local area unemployment statistics” is a clue for the first one. Follow that link and you find lots of unemployment data. The claim that Texas and Florida account for half of job gains over the past 5 years requires examination of employment data, not unemployment data. There may be employment data buried in those tables somewhere, but I didn’t find any.

      Instead, I looked up Texas and Florida payroll employment and whataya know?, they don’t come close to accounting for half of employment gains over the past five calendar years:

      More like 32%. That’s a disproportionate share of job growth, but nowhere near half. If we use the latest month, rather than the end of 2023, Texas and Florida account for 31% of job gains.

      When I said the choice of data source is a clue, I had in mind either that the reporter went looking for data, but didn’t know what he was doing, or that somebody misled the reporter and handed him a nonsense link. It’s hard to explain such a mistaken claim any other way. Assuming the reporter is a local boy, who has no obvious reason to be looking at Texas and Florida, I’m gonna guess somebody handed him a bum steer. There are lots of political liars around, ready to do just that.

      About the Hubbard, Hassett, Rogoff argument, well, there’s probably some truth to it. We know where population growth is fastest, and it makes sense that job and population grow together.

      But let’s not be overly simplistic, as perhaps these authors might wish us to be. Are wages the problem? Wages generally reflect productivity.
      Cities have higher wage because urban workers generate higher economic output. If there is a narrowing if the productivity gap, that could explain the shift in economic growth, but the authors dobotger to explore that issue.

      The authors do identify the cost of living as a reason to leave some cities. The title could as easily have been “Higher COST Metro Areas Experience Sluggish Growth”. The authors (or the editor) chose to blame wages in the title, which looks a little disingenuous, given the text of the article.

      One more thing – growth isn’t quality of life. Nor is growth necessarily the most important policy goal. Shifting jobs to low-wage, low-environmental-regulation states may – only may – be good for overall growth, but it’s bad for wages and for the environment. It’s also bad for educational attainment, life expectancy, racial equity, access to family planning services…

      So maybe the title of the piece should have been “High Educational-Attainment Metro Areas Experience Sluggish Growth”, or “Longer Life-Expectancy Metro Areas Experience Sluggish Growth”. Either would be just as true as the chosen title.

      1. Moses Herzog

        @ Macroduck
        I’m glad you put your thoughts in on this, because I was leaning pretty negatively on it, but it was still a little hard to wrap my head around the many variables involved. One of the reasons I put it up was I was hoping someone would illuminate me, and you have. I think the media source (for the newspaper article itself) claims to be non-profit and supposedly neutral. And I think the newspaper writer was probably (??) well-intentioned. But it came across as very “cheerleader-ie” for the state of Oklahoma and presenting low wages as some kind of godsend. I’m wondering if the reporter would want to tell us whether if he had to take a drastic paycut and it meant more journalists would be employed in his city/state if he would be ready to sign up for that one. Because that’s the overarching message his written report is sending readers.

  6. Moses Herzog

    Picked up gasoline about 2 hours ago. $2.82 per gallon. Got more than I usually do.

  7. Macroduck

    Claudia Sahm is back!

    Some tidbits:

    Claudia tells off Felix Salmon – justifiably – for pretending to own the English language; inflation doesn’t mean something different now than it did two years ago. She observes – rightly – that fussing over definitions ignores more important issues.

    The divergence between people’s assessment of their own financial well-being and the state of the economy occurred BEFORE inflation accelerated. To blame inflation for that divergence is to ignore the facts.

    Ignorance of facts, about the state of the economy, the state of the stock market, is wide spread. A large number of people believe unemployment is at a 50-year high, when it’s near a 50-year low. Roughly half believe the U.S. is in recession. (We know why, but Claudia avoids mentioning the right-wing echo chamber.) “Lived experience” of the economy is a poor explanation for the divergence between facts and moods, when reports of difficulty finding work are scarce as hens teeth.

    In an email, Claudia says “Inflation is coming down. It’s time to cut.” She worries that an asymmetrical Fed view risks recession – nobody on the FOMC is talking about big cuts if the need should arise. (Remember, the Fed is usually late in recognizing recession.)

    1. Moses Herzog

      I’ve always had mixed feelings about Claudia Sahm. But she’s made some very cogent points. Her voice should be heard (as long as she keeps the “I’m a target because I’m female!!! boohoo!!!! boohoo!!!!! boohoohoo!!!” melodrama toned down. Just say what you gotta say, defend yourself when appropriate and keep the gender-related whining to a minimum.

      Nice share Macroduck, hope her new employers give her a broad swath to discuss things she wants to discuss. And yes, lectures on grammar should be kept to a minimum. “Picking holes” with grammar just isn’t that crucial when people get the base meaning of what is being expressed. I really don’t care when rednecks say “ain’t”. Hey, I got it.

    2. pgl

      “We can discuss whether people care more about the increase in prices (inflation) or the level of prices, but the level of prices is NOT inflation.”

      Exactly even if we have endured literally THOUSANDS of dishonest comments from MAGA moron Bruce Hall. Brucie has to know the difference by now but we long ago realized Brucie boy lies even more than his hero – Donald Trump.

    3. pgl

      “Prices rose 15% from March 2021 to March 2024—about half the increase from March 1977 to March 1980 . Sentiment is not half as bad as then. It’s as bad.”

      Of course we did not have Faux News when Carter was President. Yes – a parade of pretend economists like Kudlow who may be even worse at being honest about economics than even Bruce Hall.

    4. pgl

      California math (Kevin Drum’s latest will make you laugh)

      Check out how dumb Jorge is (yes Bruce Hall level dumb). And in case Brucie thinks Jorge has a point, Kevin replies:

      This is a master class in getting things wrong:

      Inflation in California has been lower than the rest of the country.
      According to the USDA, the price of bacon in California under Joe Biden has gone up about 18%, from $5.38 to $6.37.
      Much of that is due to Proposition 12, which mandated larger cages for pigs. Nothing to do with Biden.
      If bacon had gone up from $5 to $15, that would be a 200% increase.
      I guess Californians are bad at math.

  8. pgl

    Matt Gaetz is the top user of new congressional honor system

    More than 300 House lawmakers were reimbursed at least $5.2 million for food and lodging while on official business in Washington last year under a new, taxpayer-funded program that does not require them to provide receipts. ….Rep. Matt Gaetz (R-Fla.), the program’s overall top spender, was reimbursed for nearly $30,000 in lodging expenses and more than $10,000 for food in 2023. He was reimbursed for more than $4,000 for lodging in two different months and more than $3,000 in five different months.

    Kevin Drum picks on Matt Gaetz as he highlights this WaPo story

    Now Kevin – how do you expect Matt Gaetz to pay for his 17 old prostitutes?

  9. Moses Herzog

    WOW. Larry Allen passed away—while he was on a vacation with his family. He was a MONSTER (monster in a good way) who played on Barry Switzer’s 1995 season NFL Champion team. A Dallas Cowboy legend among legends.

    Wanna know what a monster Larry Allen was?? Could bench press 700 pounds. And when Larry Allen “pancaked” someone, they knew it.

    Age 52. (wild guess would be heart gave out, but only a 100% guess)

  10. pgl

    Kevin Drum finds a white middle aged dude from Texas who cannot vote for Trump because he is incompetent at (holding back on the punch line):

    As far as porn stars go for affairs, he could have set a better example for who to have an affair with…. There are so many wonderful porn stars out there…. But I want a president who’s going to be able to cover up a $130,000 bribe to Daniels. If he can’t pull that off, I’m not going to trust him with the nuclear football. This seems like such an easy thing for him to screw up. I’m kind of leaning toward Biden now.

    1. Macroduck

      The plan was to stiff Stormy* if the opportunity arose. Can’t do that if you hand over a bag of Franklins. And I recall that Trump was a little slow in reimbursing Cohen. Not paying is a life-long habit; Franklins don’t fit.

      *Keep it clean, kids.

    2. Moses Herzog

      Why don’t you just admit who you were thinking of when you wrote “There are so many wonderful porn stars out there” and type “…… for example, Charlton Heston in the porn film ‘Planet off the Apes’??”

      They just don’t make “conservatives” like they used to. Men who won’t sell off their deep sense of personal integrity for money alone.

  11. Ivan

    You have to give Ukraine credit for absolutely brilliant strategy. A few months ago they saw a Russian buildup for attacks into Kharkiv by mid June. By weakening their own defenses they fooled the Russians to attack early (before the Russian invasion force had been fully build up). Those early attacks build political pressure for allowing Ukraine to use western weapons inside Russia. Now the rest of the Russian invasion force (still being assembled on “safe” grounds inside Russia) is vulnerable to attack. As a collateral benefit, the Russian attack forces on the rest of the frontline have been weakened to the point of making only marginal progress during a vulnerable period (when US weapons deliveries to the front are still building up).

  12. Macroduck

    Off topic- the ECB:

    Policy announcement due Thursday. The Bank is widely expected to cut the policy rate target by 25 basis points. It has been noted that this would be the first non-emergency rate cut for the ECB in a coon’s age. (Actually, more like ten coons’ ages. Raccoons don’t live very long in the wild.)

    This non-emergency rate cut, if you look at it cross-eyed, is consistent with what’s happening in the U.S. Financial conditions haven’t smacked into a wall. Commercial real estate should, by most accounts, have led to a bunch of local banks going under. Nope. An inverted yield curve should have led to a recession. Not so far. In the EMU rate hikes lead to crisis. Not this time. Curious.

  13. Macroduck

    One little thing about today’s JOLTS data:

    Job openings aren’t normal yet, but they’re more normal now, undoing a massive rise when the economy got busy after the Covid recession. At the same time, it takes fewer openings to generate jobs now. In April, one opening generated 0.7 jobs. Two years ago, one opening only generated 0.56 jobs. Just before the pandemic, an opening generated roughly 0.8 jobs. If we get back to 0.8, we can afford fewer openings.

  14. Moses Herzog

    One thing my Dad taught me when I was still relatively young was in almost any discipline/career path of life you have to understand and soak up terminology as quickly as you can, in the largest bundles that you can manage (for me that was/is about 1 vocab word per week, haha, joking, not really). Here for the great readers of this blog I introduce you to the term “beastie rain”:

    There, now go get your meteorological degree and thank me later.

    1. Macroduck

      Tax cuts for the low end – thank you, Democrats. Tax cut for the high end – thank you, Republicans. The middle, not so much – and they are the one who do most of the voting? But also the ones who pay most of the taxes, so we can’t do anything for them. But for the rich?

      1. Moses Herzog

        “MD”—you know why I have deep affection towards you??? Because you say the things I want to say, but you say them 20 times better than I am able to say them. That’s the truth.

        Having a drink now… having a drink…… but I think I said that about right.

  15. pgl

    Employee Stock Option Plans: Impact on Transfer Pricing

    Shares of Trump Media & Technology Group are down on the past week amid former President Donald Trump’s legal woes and allegations by the company of market manipulation. TMTG CEO Devin Nunes said on Tuesday that he written to Nasdaq CEO Adena Friedman requesting the exchange’s full cooperation with any investigations into “naked” short selling, according to a Securities and Exchange Commission filing. The filing also stated that Nunes asked Friedman to “fulsomely cooperate with any and all congressional or other investigations… including by promptly providing responsive data within Nasdaq’s possession.”

    Leave it to Trump toadie Devin Nunes to suggest anyone smart enough this turkey stock is manipulating the market. No boys and girls – it is the lying scum who run Trump’s turkey stock that are manipulating the morons who own DJT stock.

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