GDP

Stronger imports, a good sign for Q4 NGDP

You may have seen headlines on Tuesday, about how US imports for October jumped to “record highs”. For the month of October, nominal US imports increased to $45.2 billion, seasonally adjusted, up 5.8% year-over-year. The financial press are keen to write about trade reports, but almost without exception miss the implications of a widening or narrowing US trade deficit. The financial press, even prestigious outlets with expensive subscription fees, will claim that greater imports mean lower GDP. Witness, the Wall Street Journal on December 5th: “The U.S. trade deficit widened in October largely because of a slowdown in exports and… Read More

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The latest update to our NGDP forecast, for the trading days of Nov. 29 though Dec 1, was run using the BEA’s second estimate of nominal GDP (revised up) as well as the first estimate of GDI (Gross Domestic Income). GDI is an alternative, but equally (possibly more) valid measure of GDP, using the income-side of final transactions to compute nominal spending/income. We use both GDP and GDI when forecasting nominal GDP, though the previous quarter’s number isn’t available until the second month of the current quarter. As the figures stand today, the latest GDP measure has Q3 up 1.1% from…...

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The basket of U.S. financial market prices that NGDP Advisers uses to update the NGDP forecast ended Nov. 9th in a slightly more bullish direction than they had ended Nov. 8. Overall the forecast rose to 3.72% from 3.68%.  Although the U.S. dollar strengthened (by itself a ‘bearish’ input into the model) stocks, copper, oil, long-short spreads, yields and the 5-year TIPS spread all moved higher (‘bullish’ signals for the model). This was a surprising result to us, particularly after futures for the S&P 500 fell hard when the results of the vote became clear the night before. Overall this…...

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