Gross Domestic Product (“GDP”) for 2019Q4 is finally out - an exciting time for economists as they all gather round and celebrate the release of new data.
Okay, maybe they don’t celebrate all that much but I would bet you that a bunch of them were at least a little excited to see the results - at least as excited as economists get.
Let’s take a look at how GDP came out versus the GDPNow forecast and the FRB Nowcast:
Real GDP came in at 2.1%, which was above the two nowcasting models from the FRB. So, one might think that this would mean the market would be super happy and stocks would go up. Surprise! No one really cares. Sorry economists.
Ironically, economists are actually their own worst enemy here. Reason being, the actual results were in line with what economists were expecting in aggregate.
If you look at one GDP forecast individually like GDPNow, it will almost certainly be off because no one has a crystal ball. However, if you took the aggregate of all the GDP guesses out there and calculated a consensus, it was actually right around 2.0% for 2019Q4. The economist hive mind did pretty well and that’s why markets shrugged. There wasn’t really much surprise or new information. Expectations were met.
In other news, the coronavirus continues to develop rapidly. That’s definitely a bigger story to markets than a GDP in line with expectations.
Is it possible that 2020Q1 GDP could see a negative impact due to the spread of infection? More to come on the virus and it’s ongoing damage soon.