The Atlanta Fed updated its nowcast model today with the ISM results we reported earlier. The numbers are big:
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2018 is 5.4 percent on February 1, up from 4.2 percent on January 29. The forecast of real consumer spending growth increased from 3.1 percent to 4.0 percent after this morning’s Manufacturing ISM Report On Business from the Institute for Supply Management, while the forecast of real private fixed-investment growth increased from 5.2 percent to 9.2 percent after the ISM report and this morning’s construction spending release from the U.S. Census Bureau.
This is very preliminary since we are still less than halfway through Q1 right now. However, these are really big numbers. The consumer spending number is especially large. The fact that the Atlanta Fed’s tracker is so high likely means we will see a 3%+ print for Q1 real GDP growth. And that will raise expectations for more rate hikes by the Fed.