Following today’s ISM and construction reports, the GDPNow forecast for 3rd-Quarter GDP rose to 4.7%. Nowcast is 2.0%.

The GDPNow to Nowcast spread is the widest in history.

GDPNow Latest Forecast: 4.7%— September 4, 2018

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2018 is 4.7 percent on September 4, up from 4.1 percent on August 30. The nowcasts of third-quarter real consumer spending growth and third-quarter real private fixed investment growth increased from 3.0 percent and 3.0 percent, respectively, to 3.6 percent and 4.3 percent, respectively, after this morning’s construction spending report from the U.S. Census Bureau and this morning’s Manufacturing ISM Report On Business from the Institute for Supply Management. The model’s estimate of the dynamic factor for August—normalized to have mean 0 and standard deviation 1 and used to forecast the yet-to-be released monthly GDP source data—increased from 0.18 to 1.14 after the ISM report this morning.

Nowcast Latest Forecast: 2.0%— August 31, 2018

GDPNow vs. Nowcast 

The inventory contribution to GDP in the GDPNow model is 2.1% That exceeds the entire estimate of Nowcast.

The spread is a whopping 2.7 percentage points, the largest in history.

At least one of these models is seriously wrong.