More Taming of GDP Growth Figures for Q3 of 2018

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The economy may get another 4% growth rate in gross domestic product (GDP) in the third quarter of 2018. Or will it? The figure for the second-quarter GDP growth in 2018 was revised up to 4.2%, and it’s going to be almost a month from now before we find out if the 4% growth can be seen again.

One figure that is updated periodically based on current and past economic readings comes from the Atlanta Federal Reserve Bank’s GDPNow forecasting tool. The September 19 update had a prior 4.4% growth rate projected for third-quarter GDP. That has now dropped to a growth rate of 3.8% in the September 27 update.

The seasonally adjusted GDPNow model estimate has a so-called nowcast of the contribution of net exports to third-quarter real GDP growth declined from −0.72 percentage points to −1.20 percentage points after Thursday’s GDP release from the U.S. Bureau of Economic Analysis and this morning’s advance release on international trade in goods from the U.S. Census Bureau.

Separately, there are other GDP estimates out there that are less rosy than the Atlanta Fed’s current model. A firm called Macroeconomic Advisors is shown to have a 3.4% GDP growth target for the third quarter, and the New York Fed’s nowcast signaled GDP growth of just 2.3% for the third quarter as of last week.

Note that these models are generally subject to many changes each week or month. This is the final week of the quarter and many of the formal economic reports covering September have not yet even been seen. As a reminder, personal consumption accounts for roughly 70% of GDP in the United States.