Caught something of a cold around three weeks ago. Did not mind resting it off, and during the weekend it started to yield other symptoms, which warned me that a rest was needed. Thus, I’ll be taking 2-3 days off this week (or possibly for the rest of the week).
However, before the break, let’s go through the recent U.S. GDP numbers and how they’ve affected our forecasts. The U.S. growth rate “collapsed” to 1.4% (annualized) in the fourth quarter.
As most nowcasts assumed Q4 growth to come in between 3% and 2.8%, with our last nowcast suggesting a growth rate of 3.2% (0.8% Q-to-Q), it was a big miss from practically everybody. Those who think that the government shutdown was behind the collapse, I direct to the analysis of Mike “Mish” Shedlock. According to it, the shutdown shed only 0.9% of the GDP.
However, while the figure was notably lower than what our last forecast at the end of January suggested, it was still within the 95% confidence intervals of the forecast (more on that at a later date). Figure 1 presents the comparisons of our forecasts for this year and the actualized values for the U.S. (real) gross domestic product (note that revisions have been minimal of late, which is why Q2, Q3, and Q4 GDP basically sit on the same line).
I also updated our forecasts on Saturday. I simply needed to know right away if Q4 data changed anything. It did not. Our forecasting model continues to assume that the U.S. economy is heading toward a collapse.
