Never just look at the headline number. “Why” is the question. GDP now declines from 3.3% q/q AR to 2.8% and GS tracks 3.0%.
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source: Rindels, Walker, “US Daily: Q3 GDP Preview,” Goldman Sachs Global Investor Research, October 29, 2024, Exhibit 2.
2.8% or 3% is lower than previous current projections, but still well above recession levels (think about it). EJ Antoni thinks recession may have started in July or August).
Looking at GDPNow Forecast Evolution (As of October 29, 2024) A big reason for Nowcast’s decline appears to be increased imports. How do I interpret this?
The interpretation highlights the differences between accounting and economics. Higher rates of income growth (not due to exchange rate appreciation) probably mean that faster growth is expected now and in the future (with higher incomes on consumption and investment, both of which are future predictors). However, a rise in the current level of imports, holding the other components of GDP constant (GDP ⇔ C+I+G+X-IM), means that the current outlook for GDP is lower (h/t my old colleague at CEA ) Steve Brown who taught me this.)
Here, imports surprised us with an upward trend. In preliminary economic data released today:
Figure 1: Real goods imports in million 2020$ (blue, left logarithmic scale) and their real value in US dollars (red, right logarithmic scale). Import deflation using BLS prices for commodity imports. NBER defines recession dates as gray, from peak to trough. Source: Census and Federal Reserve with calculations by FRED, NBER, and author.
So while this quarter’s numbers are down, next quarter’s implied growth rate (ceteris paribus) is up.
