The Atlanta Fed’s Running Estimate Puts US Third Quarter Growth at 5.1 Percent
The Atlanta Fed’s GDPNow model put third quarter growth at 5.1 percent at an annual rate on 17 September, unchanged from the day before after rounding and up from 4.4 percent on 10 September. The jump came from data rather than judgement: after releases from the Census Bureau, the Bureau of Labor Statistics and the Treasury’s fiscal service, the model lifted its nowcast for consumer spending growth to 4.1 percent from 3.6 percent and for government spending growth to 2.3 percent from 1.3 percent.
What is holding the number up
On the model’s own breakdown, consumer spending contributes 2.82 points of the 5.08 percent unrounded estimate and the change in private inventories another 2.03, so those 2 lines account for 95 percent of the total on our calculation. Business investment adds 1.39 points and government 0.40. Net exports subtract 1.38 points and housing subtracts 0.18.
| Component | Contribution, points |
|---|---|
| Consumer spending | 2.82 |
| Change in private inventories | 2.03 |
| Business fixed investment | 1.39 |
| Government spending | 0.40 |
| Net exports | -1.38 |
Contributions to the unrounded 5.08 percent estimate of 17 September. Residential investment contributes minus 0.18 points.
Housing was the only thing that moved
The 17 September update changed one line. After the morning’s housing starts release, the nowcast for residential investment growth fell to minus 4.7 percent from minus 4.3 percent, which took 0.02 points off the total and left every other component unchanged. That is the whole of the day’s revision.
Why it matters: For anyone reading the US cycle from the Gulf, a running estimate above 5 percent is a striking number, and the composition is where the caution sits. On our reading an estimate that leans this heavily on inventories is fragile, because inventory contributions are volatile and a 2.03 point contribution from stockbuilding can reverse sharply from one quarter to the next, and net exports are already subtracting 1.38 points.
Outlook: The next update is 25 September. The bank is explicit that this is not a forecast: it calls the number a running estimate based on available data, with no subjective adjustments and nothing in it but the model.
Sources: Federal Reserve Bank of Atlanta.
