Tomorrow, the BEA releases its preliminary (advance) estimate of GDP for the second quarter of 2022.
The above chart reveals how the Atlanta Fed GDPNow mannequin sees issues.
The GDPNow mannequin estimate for actual GDP progress (seasonally adjusted annual price) within the second quarter of 2022 is -1.2 p.c on July 27, up from -1.6 p.c on July 19. After current releases from the US Census Bureau and the Nationwide Affiliation of Realtors, the nowcast of the contribution of stock funding to second-quarter actual GDP progress elevated from -2.50 share factors to -2.30 share factors, whereas the the nowcast of the contribution of the change in actual web exports to second-quarter actual GDP progress elevated from 0.18 share factors to 0.59 share factors.
Actual Remaining Gross sales
Most eyes are on the headline quantity, however that is not what one must be watching. The essential quantity is Actual Remaining Gross sales (RFS). It is the true backside line quantity for the economic system.
The GDPNow RFS estimate is 1.1 p.c.
If correct, that may rule out a recession beginning within the first quarter. Nevertheless it doesn’t rule out a recession beginning in Could, my most popular beginning month.
April Retail Gross sales
The April retail gross sales report was on Could 17. I commented Retail Gross sales Simply Beat Expectations, US Treasury Yields Bounce in Response
April retail gross sales come on on the new aspect of economists’ expectation. The Fed has work lower out for itself.
On Could 17, the GDPNow forecast was 2.5 p.c with actual closing gross sales at 3.7 p.c.
That is a sizzling begin to the quarter primarily based on April gross sales information.
Could and June Information
Scroll to Proceed
Beginning in Could, retail gross sales floundered and housing fell although the ground. The RFS part of GDP fell from 3.7 p.c to 1.1 p.c.
Which means -2.6 p.c on RFS in Could and June. That is a fairly steep contraction. Power in April negates a recession beginning within the first quarter no matter two quarters of unfavorable GDP.
And no person modified the definition of a recession. The NBER doesn’t outline a recession as two quarters of unfavorable GDP.
My Could recession date is dependent upon a few issues: A GDP report from the BEA tomorrow that confirms GDPNow, and continued housing and retail gross sales weak point that I count on.
Jobs are very lagging and in contrast to others, I count on relative energy in comparison with most recessions.
From a jobs standpoint I count on a Lengthy However Shallow Recession With Minimal Job Losses.
From a inventory market perspective, I count on issues can be brutal.
For dialogue, please see Synthetic Wealth vs GDP: Why Earnings and the Inventory Market Will Get Crushed
This submit originated at MishTalk.Com.
Thanks for Tuning In!
Please Subscribe to MishTalk Electronic mail Alerts.
Subscribers get an e-mail alert of every submit as they occur. Learn those you want and you’ll unsubscribe at any time.
In case you have subscribed and don’t get e-mail alerts, please verify your spam folder.