Getting The Bad News Out Of The Way -- May 3, 2016: Could The Revised 1Q16 GDP Drop Below 0.3% -- You Betcha

Updates

Later, 7:52 p.m. Central Time: see first comment --

NY Times, Reuters, and Bloomberg all reported that February construction spending was revised up, and they were all wrong...

February construction spending was originally reported at $1,144.0 billion annually, and it has now been revised down to $1,133.6 billion annually, and hence spending in March was below what was originally reported for February...what happened was there was a large downward revision to January spending, from the revised $1,150.1 billion figure reported last month to $1,122.0 billion, and hence the downwardly revised February spending was up from January, even though it was lower than originally reported...reporters apparently took the change in the MoM percentage change to mean there was an upward change in spending... 

That will at a minimum subtract 0.23 percentage points from revised 1st quarter GDP, just about the opposite of what Barclays is alleged to have forecast.... 

Original Post

 

US GDP, from GDPNow:

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2016 is 1.8 percent on May 2, unchanged from April 29.

The forecasts for second-quarter real residential investment growth and real nonresidential structures investment growth increased after this morning's construction spending release from the U.S. Census Bureau. These were offset by declines in the forecasts of real equipment investment growth and real consumer spending growth following the Manufacturing ISM Report On Business from the Institute for Supply Management.

EU GDP down to 1.6% for 2016; 1.7% for 2017. Bloomberg is reporting:

The European Commission told the euro area’s largest economies to reduce debt and modernize labor markets as it again slashed its inflation forecast and warned of slower-than-predicted growth across the 19-nation bloc.

France, Spain and Italy, which have persistently failed to hit European Union budget targets, are still off track, the Brussels-based commission said on Tuesday. Gross domestic product in the currency area will increase by 1.6 percent this year and 1.8 percent in 2017 -- both 0.1 percentage point lower than the commission forecast in February. Inflation will average 0.2 percent this year, below the European Central Bank’s target.

China manufacturing down. ZeroHeadge is reporting:

China manufacturing PMI disappoints -- in contraction for 14th straight month. Despite a trillion dollars of credit spewed into the Chinese economy, manufacturing remains in a slump as April's China PMI tumbled to 49.4 after a brief bounce back up to 49.8 (from the 48.0 low in February). This is the 14th month in a row of contraction. 

Okay, now that the bad news is out of the way, upward and onward.