Wow! 4.1% -- Latest GDP Now Forecast; Industrial Production Surges, Surprises Analysts -- May 16, 2017

From GDPNow:

Latest forecast: 4.1 percent — May 16, 2017

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2017 is 4.1 percent on May 16, up from 3.6 percent on May 12.

The forecast of second-quarter real residential investment growth increased from 6.0 percent to 8.3 percent after this morning's housing starts release from the U.S. Census Bureau.

The forecast of second-quarter real final sales to private domestic purchasers growth increased from 3.3 percent to 3.6 percent after this morning's industrial production (IP) report from the Federal Reserve Board of Governors.

The model’s estimate of the dynamic factor for April—normalized to have mean 0 and standard deviation 1 and used to forecast the yet-to-be released monthly GDP source data—increased from 0.32 to 0.59 after the report.

The forecast of the contribution of inventory investment to second-quarter real GDP growth increased from 1.00 percentage points to 1.20 percentage points after the IP report. Much of the increase was concentrated in motor vehicle and parts dealer inventories as motor vehicle assemblies increased 6.4 percent in April, according to the IP report.

Meanwhile, as noted earlier, US industrial production surged. From The Wall Street Journal:

• measure of output at factories, mines, and utilities -- largest gain in three years
• production surged 1%; forecast of 0.4%
• manufacturing, the biggest component: up 1% month-over-month; up a whopping 1.7% over same period last year