There are lots of caveats to the modeled data
The Atlanta Fed GDPNow estimate for third-quarter growth rises to 35.3% from 35.2% previously. With Covid causing lots of unique volatility and with it percentage moves that outside the norm, the model may have some drawbacks. The Atlanta Fed specifically says:
GDPNow is not an official forecast of the Atlanta Fed. Rather, it is best viewed as a running estimate of real GDP growth based on available economic data for the current measured quarter. There are no subjective adjustments made to GDPNow-the estimate is based solely on the mathematical results of the model. In particular, it does not capture the impact of COVID-19 and social mobility beyond their impact on GDP source data and relevant economic reports that have already been released. It does not anticipate their impact on forthcoming economic reports beyond the standard internal dynamics of the model.
In other words, the model results are the model results (good, bad or indifferent).
The current estimate rose to 35.3% from 35.2% at the last release. In their own words:
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2020 is 35.3 percent on October 20, up from 35.2 percent on October 16. After last week's Monthly Treasury Statement from the U.S. Department of the Treasury's Bureau of the Fiscal Service and this morning's housing starts report from the U.S. Census Bureau, the nowcast of third-quarter real residential investment growth increased from 46.8 percent to 50.3 percent.
The next GDPNow update is Tuesday, October 27. Please see the "Release Dates" tab below for a list of upcoming releases.
The NY Fed Nowcast of GDP growth for the 3rd quarter is anticipating a much different result. Released weekly, the last report on Friday showed that there model estimates growth at 13.8%.
The disparity highlights the limitations of modeling especially during volatile economic times with volatile economic numbers. Click here for the New York Fed's last report.
