The GDPNow forecast jumped 0.6 percentage points this week, but nearly all of it was inventories. The Consumer has died.

The GDPNow Forecast jumped 0.6% today, but 0.5 percentage points was an inventory adjustment. The GDPNow assessment of real final sales, the bottom-line measure of the economy, is only 1.2%, up 0.1 percentage points from a week ago.

GDPNow Latest Forecast: 2.4 Percent – March 29, 2018

  • The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2018 is 2.4 percent on March 29, up from 1.8 percent on March 23.
  • The forecast of the contribution of inventory investment to first-quarter real GDP growth increased from 0.66 percentage points to 1.21 percentage points after yesterday’s advance releases of wholesale and retail inventories by the U.S. Census Bureau, yesterday’s GDP release by the U.S. Bureau of Economic Analysis (BEA), and this morning’s release of the revised underlying detail tables for the National Income and Product Accounts by the BEA.
  • Advance Economic Indicators

    Yesterday, the Census Department posted Advance Reports(preliminary) on U.S. International Trade in Goods, Wholesale Inventories and Retail Inventories.

    I commented on the trade aspect in Trade Deficit Widens Again: Expect More Trump Howls. Here are the other components.

    Wholesale inventories are up 1.1%. Retail inventories are up 0.4%. Meanwhile, consumer spending is faltering as noted earlier today in Consumer Bites the Dust in First Quarter. 

    In nominal terms, consumer spending was up 0.2% in both January and February. The inventory numbers are nominal as well.

    Unless there is a pickup in consumer spending, manufacturers are ramping up production for consumer spending that will not happen.

    It is too early to say the consumer has thrown in the towel for good as one quarter proves little. But if the consumer did throw in the towel, there’s a clear problem on the horizon, on many fronts.

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