Atlanta Fed Lifts GDP Growth Estimate to 4.6%
- The Trump Effect Expands
The US economy is growing at a 4.6% annualized rate in Q-3 following the government’s data on new-home sales and costs, the Atlanta Federal Reserve’s GDPNow forecast model showed Friday.
Friday’s Atlanta Fed estimate is higher than the last estimate of 4.3% on 16 August.
The nowcast of Q-3 real residential investment growth increased from -4.5% to -1.1%.
After Friday morning’s advance durable manufacturing report from the Census Bureau, the nowcast of Q-3 real nonresidential equipment investment growth increased from 6.4% to 7.5% and the nowcast of the contribution of inventory investment to third-quarter real GDP growth increased from 1.92% to 2.03%.
Highlighting Friday’s economic news, new orders for Key US-made capital goods increased more than expected in July and growth in shipments held firm, signs that business investment started the third quarter on a strong note.
The Commerce Department said on Friday orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 1.4% last month after an upwardly revised 0.9% increase in June. Business spending on equipment is being supported by The Trump Administration’s $1.5-T income tax cut package, which came into effect in January.
The government said Thursday that sales of new US single-family homes unexpectedly fell in July to a 9-month low in a sign the housing market was cooling and could give less support to the overall economy.
The Commerce Department said new home sales decreased 1.7% to a seasonally adjusted annual rate of 627,000 units last month, the lowest level since October 2017. June’s sales pace was revised up to 638,000 units from the previously reported 631,000 units. New home sales are drawn from permits and tend to be volatile on a M-M basis. They increased 12.8% from a year ago. Housing market data has weakened in recent months, with home resales declining in July for the 4th month running.
The Atlanta Fed’s GDP estimate more than 2X as high than the New York Federal Reserve’s calculation of 2% for Q-3 economic growth released last Friday.
The next GDPNow update is Thursday, 30 August.
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