The Federal Reserve Bank of Atlanta has reported that its forecast for U.S. gross domestic product (GDP) growth dropped to zero on April 1 and ticked back up to 0.1% on April 2. The bank uses a unique model called GDPNow to prepare its forecasts, and the model typically estimates growth well below the rate projected by the Bureau of Economic Analysis (BEA).
The GDPNow model aggregates the same 13 subcomponents used by BEA to construct its estimate, but when a data point is not available, the model uses “bridge equations” to fill the gap. Other forecasters use similar “nowcast” techniques, but the Atlanta Fed notes that other forecasts are not updated more than once a month or once a quarter. Also, they are not publicly available and do not include forecasts of the subcomponents that add color to the top-line number. The GDPNow model fills those voids.
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