WASHINGTON. CDN’s Market Maven has returned to The Swamp after a welcome, week-long vacation with old high school friends. There’s been a great deal of catching up for me to do, re: the U.S. stock market and business in general. But for me, last week’s Q2 GDP estimate from the Atlanta Fed proved to be a real eye-opener. Though just a rolling estimate, this latest data dump by the Atlanta Fed would seem to indicate that at least in a business sense, President Trump’s MAGA Revolution is well underway.
The Atlanta Fed makes current details of its GDP estimates on a site known as “GDPNow.” An excerpt from the current forecast explains the site and tells the current economic story.
“The growth rate of real gross domestic product (GDP) is a key indicator of economic activity, but the official estimate is released with a delay. Our GDPNow forecasting model provides a ‘nowcast’ of the official estimate prior to its release by estimating GDP growth using a methodology similar to the one used by the U.S. Bureau of Economic Analysis.
“GDPNow is not an official forecast of the Atlanta Fed. Rather, it is best viewed as a running estimate of real GDP growth based on available data for the current measured quarter. There are no subjective adjustments made to GDPNow—the estimate is based solely on the mathematical results of the model.
“The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2018 is 4.8 percent on June 14, up from 4.6 percent on June 8. After this morning’s retail sales release from the U.S. Census Bureau, the nowcast of second-quarter real personal consumption expenditures growth increased from 3.4 percent to 3.6 percent.”
Below is the GDPNow chart that paints this sunny economic picture.
As much as we love it, the 4.8 percent estimate is slightly misleading. The current report spreadsheet actually expresses the minimum and the maximum estimates of real Q2 GDP (Gross Domestic Product) growth. 4.8 percent is actually the max. By averaging this number with the minimum GDP estimate of 3.9 percent listed on the linked Fed spreadsheet, we obtained our headline estimate of 4.5 percent.
Whether we focus on the 4.8 number or the 4.5 number, either Q2 GDP estimate is still a swell number. And it’s also one that the previous administration’s naysayers claimed we’d likely never see again. You know, the “new reality” and all that.
The real reason we’re seeing such a big, fat Q2 GDP estimate now? Probably because The Smartest and Most-Qualified Woman in the World is not our current president. She would likely have continued with Obama’s disastrous redistributionist policies. These policies crippled American business and GDP growth steadily, even as the Great Recession began to wane.
The Lord looks out for fools. The Atlanta Fed looks out for our Q2 GDP
They say the Lord looks out for fools. If that’s so, He likewise looks out for the U.S.A. when this country has a serious lapse of electoral judgment. As in the Presidential contests of 2008 and 2012.
Of course, it’s never a good idea to crow about economic estimates. After all, the final Q2 GDP reality has yet to be confirmed. Plus, it’s hard to say whether the increasingly ongoing international tariff brouhaha will strongly affect final Q2 numbers. Or Q3 or Q4 for that matter. To quote Yogi Berra (again), when tracking the economic effects of a “trade war,” “It ain’t over ‘til it’s over.”
Nonetheless, we’ll take the good news as we get it.
We endured massive quantities of really bad news during the 8 years Barack Obama and his left-wing Democrat friends spent running down the United States, attempting to “fundamentally transform” this country into something strongly resembling the old Soviet Union. (Or worse.)
Fortunately, the American electorate averted disaster in Election 2016. And just in the nick of time.
Hopefully, the Trump administration’s current aggressive attempts to create a more even playing field abroad for American business will begin to bear fruit at some point. If that proves the case, it’s possible that the Atlanta Fed’s average 4.5 percent growth prediction for the nation’s Q2 GDP could end up being a bit too conservative.
Stay tuned, and let’s see what unfolds this week after Friday’s wobbly, tariff-induced trading action on Wall Street.
*Headline cartoon by Branco. Reproduced with permission and by arrangement with Comically Incorrect.