GDPNow is not an official forecast of the Atlanta Fed.
GDP is a key indicator of economic growth, but the official GDP estimate usually delays by 1 to 2 months. The market puts equal emphasis on projections for GDP because projections come in more timely. Atlanta Fed established a Nowcast model that uses 31 high frequency economic indicators to produce GDP forecast for the current measured quarter.
What is GDPNow?
Atlanta Fed’s GDPNow measures current economic activities using 31 available economic indicators and releases every other day. For example, Q3 GDPNow projections are available from the end of July until the end of October; Q4 projections are available starting from the end of October.
Atlanta Fed’s GDPNow is seasonally adjusted annual rate (SAAR), while NY Fed’s WEI is year-on-year rate.
What are the 31 components of GDPNow?
The 31 economic indicators cover from PCE on goods and services, equipment, intellectual property, structural real personal capital investment, imports and exports of goods and services, real Federal and State government spending and investment and real personal inventory changes.
The components include nonfarm payroll, initial jobless claims, retail sales, PCE, ISM PMI, industrial production, utilization rate, trade balance, CPI, PPI, trade price index, housing starts, etc.
Atlanta Fed runs the Beysian VAR model and Bridge equation for GDP’s four main components: consumption, investment, government spending and net exports.
Is GDPNow accurate?
GDPNow projected GDP SAAR to be -5% and -32.9% for the first two quarters this year. The official estimates for Q1 and Q2 are -4.8% and -31.4%, quite close to Atlanta Fed’s projections. Since the end of July, Atlanta Fed has been raising projections for Q3 from 11.88% to more than 35%. (Update: The official estimate of Q3 GDP growth rate was 33.1%.)