US economic growth is on track to decelerate in this year’s fourth quarter, based on The Capital Spectator’s median point forecast for several econometric estimates. Today’s initial GDP estimate for the final three months of 2014 anticipates an increase of 2.1% (real seasonally adjusted rate) — a substantially lower rate vs. the 3.5% pace in the previous quarter, according to the Q3 report published by the Bureau of Economic Analysis (BEA) last month.
Today’s initial Q4 nowcast echoes projections from other sources that expect a materially lesser growth rate. The Wall Street Journal’s survey of economists this month, for example, predicts a 2.7% gain for the official fourth-quarter GDP report, which BEA will publish in late-January in its “advance” estimate. Wells Fargo expects an even slower rate of growth, forecasting a 1.6 percent annualized pace in Q4, according to its Nov. 12 estimate.
Here’s a graphical summary of how The Capital Spectator’s Q4 nowcast compares with recent history and forecasts from other sources:
Here are the individual nowcasts that are used to calculate the median estimate on CapitalSpectator.com:
As updated nowcasts are published, based on new economic data, the chart below will track the changes in the evolution of the projections.
Finally, here’s a brief profile for each of The Capital Spectator’s GDP nowcast methodologies:
R-4: This estimate is based on a multiple regression in R of historical GDP data vs. quarterly changes for four key economic indicators: real personal consumption expenditures (or real retail sales for the current month until the PCE report is published), real personal income less government transfers, industrial production, and private non-farm payrolls. The model estimates the statistical relationships from the early 1970s to the present. The estimates are revised as new data is published.
