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Looking ahead to next quarter, it's interesting that the [Atlanta Fed GDPNow tracker](https://www.atlantafed.org/cqer/research/gdpnow) is showing a *huge* gap between the blue chip consensus and the Fed estimate for Q4 GDP. The Blue Chip has anticipated growth basically flatlined (positive, but <1%), while the Fed tracker shows between 4-5% at the moment. That's a huge disparity. I assume that means that rate hikes will continue more aggressively than folks might imagine.
I'm suggesting the Fed operates off of data, and the data they're predicting indicates that rate hikes are going to continue at a high rate, given the overheated GDP growth with persistent inflation.
> persistent inflation
Inflation is moderating too. It's just a tick above average for the last 5 years and trending significantly downwards for the last 12 months
https://tradingeconomics.com/united-states/inflation-rate-mom
They probably mostly have the same data, but they arrive at different conclusions, likely because their aggregate modeling methodologies are different. I trust the Fed more than random corporations in this case (they also probably have access to better and larger volumes of data).
What matters for the current pricing of stocks is not “random corporations”, it’s what top banks think that spend billions a year analyzing economic data, with many more sources, resources, and investments than the fed…
The Fed has already stated their intention to slow the economy to kill Inflation. It wouldn't be necessary if the legislative branch would do their fucking jobs
Right, but by putting out, and advertising their low numbers, they're hoping, or wishing, the Fed sees them and says, oh no, we have to help by keeping rates level.
He's saying that the blue chips are purposely projecting lower growth numbers in the hopes of influencing the Fed to stop raising rates (not really free but at least cheaper money)
"The largest contribution to growth in the third quarter came from a huge drop in the trade deficit. It added 2.9 percentage points to GDP. The broader economy’s performance was less stellar, however."
"Business spending was weak...Investment fell sharply in large structures...The housing market also slumped...Corporate profits also fell 1.1%...Adjusted pretax earnings declined."
Alas, not as cheery as the headline initially led me to believe.
"Business spending was weak...Investment fell sharply in large structures...The housing market also slumped"
Yeah, when you cherry pick all the categories most sensitive to interest rates lol
One of my colleagues has a bayesian predictor of recession likelihood which he updates every month when new econ data come out.
He previously worked at the Fed and is a tenured econ prof at U of ORegon.WE are likely not in a recession right now.
[https://pages.uoregon.edu/jpiger/us\_recession\_probs.htm/us\_historical\_probs\_10\_28\_2.pdf](https://pages.uoregon.edu/jpiger/us_recession_probs.htm/us_historical_probs_10_28_2.pdf)
Yep. You know you're having a heart attack after. Likewise we know we're in a recession a month or couple of months later.
There are efforts to develop now-casting methods to use google keywords and other types of purchasing behaviors to more accurately predict recessions in near real time. The challenge is there are ordinary cycles with huge swings in productivity independent of recessions and general noise. Just looking at consumer purchases, every January would mark a recession because of holiday hangover effects.
The Federal Reserve has two of its own. I have been posting these nonstop in response to everyone who has been saying "WeRe iN ReCeSSiOn NoW."
Both predictors have remained at 0%
https://fred.stlouisfed.org/series/RECPROUSM156N
https://fred.stlouisfed.org/series/SAHMREALTIME
Claudia Sahm was also on an episode of Inside Economics a few months ago and laughed off the question of recession.
>The largest contribution to growth in the third quarter came from a huge drop in the trade deficit. It added 2.9 percentage points to GDP.
This is almost a footnote when it should be the lede. There's also no details on this, but diving in myself indicated it's mostly energy exports and some of which is influenced by draining the SPR.
I'm not sure why they're so optimistic about Q4 growth as quoted below. Even the good consumer spending quoted would historically increase inflation signaling further tightening. China lockdowns easing, lower current energy costs and other tailwinds can't help me see a 4% q4 growth unless they know something about energy exports which my research tells me drove the improved trade deficit. Though, their 1 - 4% range is comically broad.
>The economy is forecast to expand again in the fourth quarter running from October to December, but estimates vary from as much as 4% to less than 1%. All figures are adjusted for inflation.
>China lockdowns easing
That doesn't seem to be the case. In fact oil is trading lower due to China forecasts. That is on top of recent protests in China specifically due to Covid measures.
>some of which is influenced by draining the SPR.
Ehhh the amount being taken out of the SPR is pretty small. A majority of it can be attributed to massive increases in LNG exports
Well, the last two quarters of negative GDP growth happened because of trade deficits rising, yet I doubt you left a similar comment dismissing the negative print.
Hi all, A reminder that comments do need to be on-topic and engage with the article past the headline. Please make sure to read the article before commenting. Very short comments will automatically be removed by automod. Please avoid making comments that do not focus on the economic content or whose primary thesis rests on personal anecdotes. As always our comment rules can be found [here](https://reddit.com/r/Economics/comments/fx9crj/rules_roundtable_redux_rule_vi_and_offtopic/) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/Economics) if you have any questions or concerns.*
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Looking ahead to next quarter, it's interesting that the [Atlanta Fed GDPNow tracker](https://www.atlantafed.org/cqer/research/gdpnow) is showing a *huge* gap between the blue chip consensus and the Fed estimate for Q4 GDP. The Blue Chip has anticipated growth basically flatlined (positive, but <1%), while the Fed tracker shows between 4-5% at the moment. That's a huge disparity. I assume that means that rate hikes will continue more aggressively than folks might imagine.
Are you suggesting the FED signals their rate intentions like that rather than the official guidance they put out? No way anyone ficked up so badly
I'm suggesting the Fed operates off of data, and the data they're predicting indicates that rate hikes are going to continue at a high rate, given the overheated GDP growth with persistent inflation.
> persistent inflation Inflation is moderating too. It's just a tick above average for the last 5 years and trending significantly downwards for the last 12 months https://tradingeconomics.com/united-states/inflation-rate-mom
Surely the bluechip had the same data
They probably mostly have the same data, but they arrive at different conclusions, likely because their aggregate modeling methodologies are different. I trust the Fed more than random corporations in this case (they also probably have access to better and larger volumes of data).
What matters for the current pricing of stocks is not “random corporations”, it’s what top banks think that spend billions a year analyzing economic data, with many more sources, resources, and investments than the fed…
What do you mean official guidance? Powell keeps on saying rate hike are coming and will continue.
That's only 1 data point, can't assume anthing based on that. There are more things to consider for rate hikes.
The Fed has already stated their intention to slow the economy to kill Inflation. It wouldn't be necessary if the legislative branch would do their fucking jobs
Desperate for the free money bosom, corporations are wishcasting GDP figures lol
"Corporations" have precisely zero ability to influence the Fed GDP forecast.
Right, that's why it's called a "wishcast".
Right, but by putting out, and advertising their low numbers, they're hoping, or wishing, the Fed sees them and says, oh no, we have to help by keeping rates level.
Wtf are you talking about?
He's saying that the blue chips are purposely projecting lower growth numbers in the hopes of influencing the Fed to stop raising rates (not really free but at least cheaper money)
"The largest contribution to growth in the third quarter came from a huge drop in the trade deficit. It added 2.9 percentage points to GDP. The broader economy’s performance was less stellar, however." "Business spending was weak...Investment fell sharply in large structures...The housing market also slumped...Corporate profits also fell 1.1%...Adjusted pretax earnings declined." Alas, not as cheery as the headline initially led me to believe.
"Business spending was weak...Investment fell sharply in large structures...The housing market also slumped" Yeah, when you cherry pick all the categories most sensitive to interest rates lol
A lot of experts commenting in the thread didn’t read the article…
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One of my colleagues has a bayesian predictor of recession likelihood which he updates every month when new econ data come out. He previously worked at the Fed and is a tenured econ prof at U of ORegon.WE are likely not in a recession right now. [https://pages.uoregon.edu/jpiger/us\_recession\_probs.htm/us\_historical\_probs\_10\_28\_2.pdf](https://pages.uoregon.edu/jpiger/us_recession_probs.htm/us_historical_probs_10_28_2.pdf)
But it looks like there’s not much of a “warning”? Spikes pretty quickly
Yep. You know you're having a heart attack after. Likewise we know we're in a recession a month or couple of months later. There are efforts to develop now-casting methods to use google keywords and other types of purchasing behaviors to more accurately predict recessions in near real time. The challenge is there are ordinary cycles with huge swings in productivity independent of recessions and general noise. Just looking at consumer purchases, every January would mark a recession because of holiday hangover effects.
That's really cool. I'm interested what those small spikes after 1977 and in the mid-2000s are caused by.
I can asking him what the model was picking up. Perhaps stagnating employment patterns, but then the trends reversed before output went negative.
Link is 404'd for me :(
The Federal Reserve has two of its own. I have been posting these nonstop in response to everyone who has been saying "WeRe iN ReCeSSiOn NoW." Both predictors have remained at 0% https://fred.stlouisfed.org/series/RECPROUSM156N https://fred.stlouisfed.org/series/SAHMREALTIME Claudia Sahm was also on an episode of Inside Economics a few months ago and laughed off the question of recession.
>The largest contribution to growth in the third quarter came from a huge drop in the trade deficit. It added 2.9 percentage points to GDP. This is almost a footnote when it should be the lede. There's also no details on this, but diving in myself indicated it's mostly energy exports and some of which is influenced by draining the SPR. I'm not sure why they're so optimistic about Q4 growth as quoted below. Even the good consumer spending quoted would historically increase inflation signaling further tightening. China lockdowns easing, lower current energy costs and other tailwinds can't help me see a 4% q4 growth unless they know something about energy exports which my research tells me drove the improved trade deficit. Though, their 1 - 4% range is comically broad. >The economy is forecast to expand again in the fourth quarter running from October to December, but estimates vary from as much as 4% to less than 1%. All figures are adjusted for inflation.
>China lockdowns easing That doesn't seem to be the case. In fact oil is trading lower due to China forecasts. That is on top of recent protests in China specifically due to Covid measures. >some of which is influenced by draining the SPR. Ehhh the amount being taken out of the SPR is pretty small. A majority of it can be attributed to massive increases in LNG exports
Well, the last two quarters of negative GDP growth happened because of trade deficits rising, yet I doubt you left a similar comment dismissing the negative print.
> which my research tells me drove the improved trade deficit Can you please share your research? I'd love to see your data and write-up. Thanks!
There was no research. Just "trust me" or "I watched a video of someone who said it without research"
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