GDPNow Plummets Following Weak Consumer Spending Report

U.S. President Joe Biden holds a mask as he gives remarks on his administration's response to the surge in COVID-19 cases across the country from the South Court Auditorium in the Eisenhower Executive Office Building on January 13, 2022 in Washington, DC. During the remarks President Biden urged unvaccinated individuals …
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The Atlanta Fed’s GDPNow estimate of fourth-quarter economic growth plunged from Monday’s 6.9 percent to five percent on Friday following the release of worse than expected economic data from the Commerce Department and the Federal Reserve.

The decline was driven by a severe drop in the model’s estimate of Personal Consumption Expenditures. At the start of the week, these were estimated to have grown at a rate 3.14 percent. On Friday, this was downgraded to 1.4 percent.

GDPNow uses economic modeling to read what the most current economic data implies about economic growth. It is not a forecasting model but a real time assessment. The next update is scheduled for Wednesday, January 19th.

The Commerce Department reported that retail sales fell by 1.9 percent in December, far worse than expected and the second disappointing month. Adjusted for inflation, sales were likely down in November as well. The Federal Reserve said that industrial production also fell in December, with manufacturing output tumbling 0.3 percent.

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