Fed thankful for hurricane’s Harvey and Irma since it gives them cover for slashing Q3 GDP estimates
It’s another fiscal quarter and another major downgrade of GDP estimates by the Atlanta Fed.
The U.S. central bank loves to use whatever economic data models are available to justify their narrative while at the same time discounting or even discarding information that could interfere with desired monetary policies. ¬†For example the Fed has pushed the theme of ‘economic recovery’ for years following their introduction of zero interest rates and quantitative easing, but have completely ignored the fact that despite adding tens of trillions of dollars to the economy and markets, it has been the worst ‘recovery’ coming out of a recession in our history.
So with that being said it should not come as a surprise that the Fed began Q3 with an estimated 4% economic growth forecast, and as we near the end of the quarter those estimates have now fallen to just 2.2%.
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2017 is 2.2 percent on September 15, down from 3.0 percent on September 8. The forecasts of real consumer spending growth and real private fixed investment growth fell from 2.7 percent and 2.6 percent, respectively, to 2.0 percent and 1.4 percent, respectively, after this morning’s retail sales release from the U.S. Census Bureau and this morning’s report on industrial production and capacity utilization from the Federal Reserve Board of Governors. –¬†Zerohedge
Analysts who followed the Atlanta Fed’s forecasts from Q2 and Q1 here in 2017 saw the exact same pattern where the central bank offered up a wild and untenable GDP forecast at the beginning of the quarter, only to see them slash that percentage multiple times, and by more than half at the tail end of the reporting period. ¬†And with hurricane’s Irma and Harvey wreaking major havoc to the energy, fishing, tourist, and industrial sectors of the Gulf coasts, the storms offer wonderful cover for the central bank to justify their failed forecasts here in Q3.
The Federal Reserve has not been very accurate in any economic outlook they summarily project, and even their major narrative of ‘economic recovery’ has been a pile of bovine scatology. ¬†This is because they have simply ignored the 93 million Americans who are in the labor¬†force but not counted in the unemployment rate, and their fallacy of there not being enough inflation since they never choose to count the price inflation that is raging within the general economy.
Kenneth Schortgen Jr¬†is¬†a writer for¬†The Daily Economist,¬†Secretsofthefed.com,¬†Roguemoney.net, and¬†Viral Liberty, and hosts¬†the popular¬†youtube podcast¬†on Mondays, Wednesdays and Fridays.¬†Ken can also¬†be heard Wednesday afternoons giving an weekly economic report on the¬†Angel Clark radio show.