Would You Like That GDP on Flat Bread

Well, we are officially at ground zero.  The Atlanta Fed at its GDP Now site has today lowered its GDP forecast for Q1 for the U.S.  On February 2, the 2015 forecast stood at a respectable 1.9%.  The economic reports in the two months since have led to a steady decline and today they lowered the forecast to zero, zip, nada, nix, nothing, zilch, zippo, goose egg, naught, nil, nuttin' honey.  Apparently they did not like the ISM Manufacturing Index numbers out today, which still showed some growth at 51.5%, but a good bit lower than February at 52.9%:


http://www.ism.ws/ismreport/mfgrob.cfm


Any number over 50% shows more companies growing than shrinking, so we are just barely there.  Now this month was less than February and February was less than January and January was less than December and . . . well, you get the picture.  Lowest number for this index in almost two years and . . . I must be reading this wrong . . . apparently it was "well short of Wall Street's forecast."


http://www.marketwatch.com/story/ism-manufacturing-index-falls-in-march-to-lowest-rate-since-may-2013-2015-04-01


Oh dear.  Oh dear, oh dear, oh dear.  Wall Street forecasts were overly optimistic - really?  I'm shocked, shocked to find that forecasts have gone wrong here. If you cannot trust Wall Street, who can you trust.  At least the ISM index number has got to be reliable as it is based on a survey of manufacturing executives and they would never fib about how well business is doing.  Yes, you can take those numbers to the bank - though I would avoid taking them to Greek banks at the moment.

P.S.

The above was originally posted by me yesterday. Today, 4/2/15, the Atlanta Fed reversed course a bit and raised the Q1 GDP forecast back to .1%.  Not huge, but an increase nonetheless.  The reason for it is a tad curious in my book.  It is tied to a foreign trade report that came out this morning.  The report showed a nice decrease in our trade deficit, which is viewed as a good thing, but both exports and imports were down from January.  It is just that the decrease in imports, which went down $10.2 billion, exceeded the decrease in exports, which only went down $3.0 billion.  Thus, the deficit was less.  So the question I have to ask is whether decreases in both export and import activity are a good sign for the economy?  Doesn't this reflect that we are both buying less from others and selling less to others?  Am I missing something?  Obviously I am missing a lot, but that is another discussion.


http://globaleconomicanalysis.blogspot.com/2015/04/trade-deficit-shrinks-first-quarter-gdp_2.html