Download US Real GDP Growth Nowcast: 2.66% for 4Q15

U.S. Flash
25 November 2015
Economic Analysis
U.S. Real GDP Growth Nowcast: 2.66% for 4Q15
Kan Chen
•
•
•
Nowcast model predicts 2.66% for 4Q15 real GDP growth
Labor market’s robust improvements contribute to economic growth
Manufacturing productivity shows signs of pick-up due to increase in weekly hours
Our most recent estimate based on the Mixed-Frequency Model for the U.S. (MIFUS) suggests a real GDP
growth rate of 2.66% QoQ SAAR for 4Q15. This forecast incorporates various monthly indicators for October, as
well as the second release of 3Q15 GDP data on November 24.
The standout for October was the improvement in the labor market following relatively weak reports in August
and September. In particular, there were signs of improvement in the struggling manufacturing sector. Weekly
hours in manufacturing, which are a useful measure of productivity, ticked back up in October after following a
downward trend since November 2014. Therefore, the rebound of weekly hours in October, along with a strong
increase of payrolls, may finally be an encouraging sign showing the pick-up of productivity, the concern over
1
which has inspired extensive discussions.
Chart 1
Chart 2
Labor Market Statistics
SA, Hours (LHS); SA, Thousands (RHS)
Nowcast (MIFUS) vs. Official Releases
SAAR, %
500
4%
42.2
400
3%
42
300
2%
41.8
200
41.6
100
41.4
0
2014 - May
2014 - Jun
2014 - Jul
2014 - Aug
2014 - Sep
2014 - Oct
2014 - Nov
2014 - Dec
2015 - Jan
2015 - Feb
2015 - Mar
2015 - Apr
2015 - May
2015 - Jun
2015 - Jul
2015 - Aug
2015 - Sep
2015 - Oct
42.4
1%
0%
Jun Jun Jun Jul 2 Aug Sep Oct Nov Nov
12 19 24
24 25 26 20 24
Nowcast 2Q15
Nowcast 3Q15
Nowcast 4Q15
2Q15 (advance)
Average Weekly Hours: Manufacturing (LHS)
2Q15 (second)
3Q15 (advance)
Change of Employees: Nonfarm Private (RHS)
3Q15 (second)
Source: BLS & BBVA Research
Source: BEA & BBVA Research
For the last two quarters, our Nowcast model has been a useful tool for forecasting the official real GDP growth
rate, especially on the advance release. The idea of a nowcast is to use high-frequency (monthly) series to
project the movement of low-frequency (quarterly) series, and therefore we expect to obtain a more accurate
forecast for 4Q15 when November’s data is available.
1
For example, we discussed the U.S. productivity in detail on one of our previous article at
https://www.bbvaresearch.com/en/publicaciones/u-s-productivity-deceleration-evidence-from-state-level-data-of-the-u-s/
U.S. Flash
25 November 2015
DISCLAIMER
This document was prepared by Banco Bilbao Vizcaya Argentaria’s (BBVA) BBVA Research U.S. on behalf of itself and its affiliated
companies (each BBVA Group Company) for distribution in the United States and the rest of the world and is provided for information
purposes only. Within the US, BBVA operates primarily through its subsidiary Compass Bank. The information, opinions, estimates and
forecasts contained herein refer to the specific date and are subject to changes without notice due to market fluctuations. The information,
opinions, estimates and forecasts contained in this document have been gathered or obtained from public sources, believed to be correct by
the Company concerning their accuracy, completeness, and/or correctness. This document is not an offer to sell or a solicitation to acquire or
dispose of an interest in securities.