Thursday, May 15, 2008

Recession Watch: March real GDP rises modestly from the sharp February decline

Monthly real GDP, one of the five primary economic indicators that the NBER Business Cycle Dating Committee uses to judge recession start and end dates, rose modestly in March from a steep decline in February. The government does not publish GDP data at a monthly level, but the NBER BCDC says that they refer to sources such as Macroeconomic Advisers (MA) and their MGDP data series. As as Macroeconomic Advisers put the report for March:

Monthly GDP rose 0.3% in March.  This followed a 1.0% decline in February that was revised up from a 1.2% decline in last month's report.  The moderate increase in monthly GDP in March can largely be accounted for by positive contributions from personal consumption expenditures and domestic spending on capital goods.  A large positive contribution from net exports was essentially offset by a large negative contribution from inventory investment.  The level of monthly GDP in March was 0.5% below the first-quarter average at an annual rate.  Our latest tracking forecast of 2.6% growth of GDP in Q2 assumes average monthly increases of 0.4% per month from April to June.

This report is dated yesterday and has that 2.6% forecast that I reported yesterday, while a new report today from MA uses a 2.2% number. I'll track down the discrepency when I get some free time.

For comparison purposes, last month MA told us:

Monthly GDP declined 1.2% in February.  This was the second largest one-month decline in the nearly 16-year history of the index; it declined 1.6% in September 2001.  The sharp drop in monthly GDP in February was led by a sharp decline in nonfarm inventory investment.  Also subtracting from monthly GDP were declines in net exports, capital goods, and construction.  Averaged over January and February, monthly GDP was 0.8% above the fourth-quarter average at an annual rate.  Our latest tracking forecast of a 0.4% increase of GDP in the first quarter assumes a 0.3% increase in monthly GDP in March.

If the NBER BCDC is the definitive expert on marking of recessions, MA is the definitive expert on measuring real GDP at the monthly level with their MGDP data series.

-- Jack Krupansky

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