Wednesday, March 4, 2015

The Scariest Spreadsheet In Fed Possession Revealed

iT'S COMING FOLKS.  Time to start hedging your portfolio.  Typical, risky government policies to stimulate the economy which just pushes the can down the road, is coming to light.

Submitted by Tyler Durden on 03/04/2015 12:14 -0500

Yesterday we reported that over the past few weeks, something very disturbing has taken place at the Atlanta Fed Center for Quantitative Economic Research, which keeps a model, called GDPNow, that mimics the methods used by the BEA to estimate real GDP growth.
According to the AtlantaFed, "the GDPNow forecast is constructed by aggregating statistical model forecasts of 13 subcomponents that comprise GDP. Other private forecasters use similar approaches to “nowcast” GDP growth. However, these forecasts are not updated more than once a month or quarter, are not publicly available, or do not have forecasts of the subcomponents of GDP that add “color” to the top-line number. The Atlanta Fed GDPNow model fills these three voids."
In other words, what the AtlantaFed has done is recreate the bean-counting methodology used by the BEA, and all other forecastsers, however instead of using monthly data update cadence, it does so with data in real time.
This is a problem because as we showed yesterday, this most real-time model of GDP estimation, is showing something scary: a 1.2% GDP in Q1 compared to consensus estimates in the mid-2% range, and a tumble of more than 1% to just what this same model predicted Q1 GDP would be one month ago!

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