GDP nowcast, Q4, 2023: +2.2%
The 4Lights GDP Nowcast model is predicting that 4th quarter GDP grew at +2.2% (annualized, quarter-over-quarter rate)
In about 30 minutes, the government will release its first estimate for 4th quarter Gross Domestic Product (GDP). My best guess: the annual quarter/quarter growth rate for Q4, 2023 will be +2.2%.1
Nowcast?
Nowcasting is like trying to estimate something occurring in the present moment. Several organizations nowcast GDP and other things like inflation:
Federal Reserve Bank of Atlanta (GDPNow): Q4 GDP +2.4%
Federal Reserve Bank of New York (New York Fed Staff Nowcast): Q4 GDP +2.4%
Federal Reserve Bank of Cleveland (inflation nowcasting): +2.9%
4Lights GDP Nowcast
GDP data takes a long time to compile, but thousands of other economic data series are published constantly. The 4Lights Nowcast simply takes a core group of these series and makes an assessment: was the data during the corresponding quarter good or bad? It then tallies the good/bad signals with the assumption that quarters with more good signals have faster GDP growth.
Some of the series included in the nowcast include:
Population (growing population= good; shrinking = bad)
Jobs (increasing jobs = good; decreasing = bad)
Industrial production (more production = good; lower = bad)
Financial stress (higher = bad; lower = good)
Gas prices (higher = bad; lower = good)
More to come!
Economists frequently use overly complicated types of growth rates. GDP is most often “compound annual rate of change”. Take a look at FRED's growth rate tutorial.