So earlier today, following the NFP number (which was of course a beat), the Atlanta Fed lowered their GDPNow tracking forecast for Q3 growth to 3.7% from 4%.
Here was the rationale (assuming you care, which I’m reasonably sure you do not):
The forecasts of third-quarter real consumer spending growth and real fixed investment growth declined from 3.0 percent and 5.2 percent to 2.8 percent and 4.1 percent, respectively, after this morning’s employment report from the U.S. Bureau of Labor Statistics. The model’s estimate of the dynamic factor for July—normalized to have mean 0 and standard deviation 1 and used to forecast yet-to-be released monthly GDP source data—decreased from 0.64 to 0.27 after the report.
Ok, whatever, right?
Well here’s the thing about that 3.7% forecast: it’s still pretty damn robust, wouldn’t you say?
Now see if you can spot the problem in the following chart from Citi:
Let’s go to Jimmy McMillan to explain: