The next GDPNow update is March 15 which is 44 days before the GDP report is scheduled to be released on April 28. FRB Atlanta publishes the report below on forecast error over time.
Are other GDP forecasts also showing weakness? The NY Fed's Nowcast stands at 3.1%, not showing the recent slide in growth GDPNow is picking up. The Cleveland Fed's monthly forecast is 1.8%. Moody's Analytics forecast is 1.0%, and Moody's forecast has come down quite a bit since February, similar to GDPNow.
There is a disconnect between the business and consumer surveys and the hard economic data right now. Part of this difference is due to timing because easier financial conditions, improved confidence and expectations for fiscal stimulus take time to feed into the economic data. Therefore, the growth acceleration story remains intact even with a weak 1Q GDP print. The question is how long the market will wait for the strong data to surface. The disconnect between the perception of growth and the actual data must narrow eventually. Either the data will strengthen to confirm the pickup in growth, or the perception of an impending bump in growth will come back to the reality of continued subdued performance.
The stock market has priced in a pickup in economic growth subsequent to the 2016 Presidential election. If this acceleration in growth does not materializing at some point, the market may be vulnerable to a reversal.