Recent economic data has lifted CapitalSpectator.com’s median growth estimate for the upcoming third-quarter GDP report. Using a variety of sources to generate a median nowcast, today’s revision reflects a slightly stronger expansion compared with the solid rise in Q2.
Output for Q3 is projected to increase 3.1% at a seasonally adjusted annual rate. The Bureau of Economic Analysis is scheduled to publish the actual data on Oct. 30.
If the median Q3 nowcast is correct, the estimated 3.1% increase will mark a fractionally faster rise over Q2’s strong 3.0% advance. Today’s update marks a moderately faster Q3 increase vs. the previous nowcast published on Oct. 9.
The main takeaway in today’s revised Q3 nowcast: US economic activity is robust. As a result, the recession fears that arose in the summer increasingly look misguided, to put it mildly.
In fact, the regular Q3 nowcasts published on these pages have consistently indicated that recession forecasts have been overbaked. A month ago, CapitalSpectator.com reported: “GDP Nowcasts Still Indicate Low Recession Risk For US In Q3.” In mid-August, our median nowcast also indicated that growth would likely keep the US out of recession in Q3.
Although the median nowcast evolves through time, the critical factor is that growth in some non-trivial degree has been a consistent theme in the updates over the last several months. The actual data point that the government reports is hard, if not impossible, to forecast exactly.
However, the fact that a solid rate of growth has been routinely estimated for Q3 is one factor for assuming that recession risk has been low. All the more so when you consider that a deeper run of analysis across a broad range of indicators supports the low-recession risk estimate.