What will today’s GDP data look like? (and yet another call to take "the under?")
The consensus is for 3.6% growth, according to Economists surveyed by Dow Jones Newswires and CNBC. That would be quite robust, despite the inflation working its way through the economy.
Its tough enough to come up with accurate estimates under the best of circumstances; given all the incomplete data and forced assumptions, this GDP number may be even trickier. The WSJ’s Justin Lahart notes that "the Commerce Department lacks September business inventories and trade figures, it will be making assumptions of its own. And inventories and trade both got roiled in September." (I called it the Fog of Katrina)
Economist and CNBC host Lawrence Kudlow, a perennial optimist if ever there was one, thinks the energy spike post-Katrina may clock GDP: He’s looking for a real downside surprise.
I think his logic on this one is compelling. Barring any special BLS adjustments, 3.6% looks mighty aggressive. 2-3% might be a more accurate read, with Larry on the low end of the scale.
I’ll wildly guess 2.75% — but its only a guess — I don’t model GDP . . .
UPDATE: October 28, 2005 9:46am
Surprise! GDP came in at 3.8% — I havent torn apart GDP data yet, but at first read it looks like the increase was driven by consumer spending (Automobiles in particular), inventory changes, and a big increase in Federal government spending.
Dow Jones noted "For its first and second estimates of a particular quarter’s GDP, Commerce must make assumptions for some components of economic activity, for which data are unavailable."
So how did we end up with such a strong number, despite the big inflation spike and apparent weakening? Here’s the money quote:
"The Commerce Department said it adjusted its methods in some cases to take the hurricane into account."
Let’s see if we can’t figure out what these adjustments were . . .
AHEAD OF THE TAPE: One to Grow On
October 28, 2005; Page C1