From the Washington Post: “President Obama has made one thing clear while traveling from the Rocky Mountains to Texas this week: The economy is the best it has been in years and is only getting better.”
The BEA’s data-construction machinery for estimating GDP is laid out in considerable detail in its NIPA Handbook. Roughly 70 percent of the advance GDP release is based on source data from government agencies and other data providers that are available prior to the BEA official release. This information provides the basis for what have become known as “nowcasts” of GDP and its major subcomponents—essentially, real-time forecasts of the official numbers the BEA is likely to deliver.
So how is 2Q looking? Not the strong rebound many have been hoping for after the first-quarter shrinkage, just 2.6%. (As Citi notes: “Mid-expansion declines in GDP are extremely rare, and the decline in the first quarter was by far the deepest in the past 70 years”). Here is the current GDPNow forecast:
And as the chart at the top shows, the GDPNow forecast at the very low end of Wall Street expectations. And here is a worrisome bit from the WSJ:
American retailers may have more than a weather problem. Family Dollar Stores Inc. said fewer shoppers came into its stores in the three months through May 31, pushing sales down 1.8%, excluding newly opened or closed stores.
In a move to win back traffic, the dollar chain said it would begin carrying beer and wine nationally next year, adding to the tobacco, frozen food and other consumables that now make up 73% of sales. “Our results continue to reflect the economic challenges facing our core customer and an intense competitive environment,” Chief Executive Howard Levine said.
The discounter’s message echoed that of Container Store Group Inc., TCS -0.61%whose shares fell sharply midweek after its chief executive told investors that the company and its fellow store chains are in a “retail funk.”
“We’ve come to realize it’s more than just weather,” Container Store CEO Kip Tindell said. Falling traffic led to the first drop in quarterly sales at the company in more than three years.
So another faux “recovery summer?” I hope not, but that could be the case.