US Q3 GDP Now Seen Surging 20% By Atlanta Fed

One day after the BEA reported last Thursday that US GDP crashed an annualized 32.9% in the second quarter, the biggest drop since the great depression…

… the Atlanta Fed published its first GDPNow “nowcast” estimate for the third quarter, which came in at a relative subdued 11.9%, and far below sellside consensus estimates of an 18% print in the third quarter.

Perhaps shamed by Wall Street optimism, just one day business later the Atlanta Fed moments ago announced that its latest revision as of Aug 3 pushed up its Q3 GDP estimate by a whopping 65%, and its GDPNow model now estimates that real GDP growth in the third quarter of 2020 is 19.6%. The reason for the massive repricing? This morning’s Manufacturing ISM Report (which beat expectations) and construction spending report (which missed badly).

Following the latest data, the nowcasts of third-quarter real personal consumption expenditures growth and third-quarter real GDP investment growth increased from 14.4% and -1.7%, respectively, to 22.4% and 11.1%, respectively. Also, the nowcast of third-quarter real government spending growth increased from 5.7% to 6.8%.

If the Atlanta Fed is correct, the annualized Q3 GDP print would be the highest on record.

Of course, it goes without saying that if Congress fails to roll over the emergency unemployment benefits which expired last month – and which as we previously noted are instrumental in the record 25% of personal income that is funded by the US government…

… Q3 GDP will end up being another unmitigated disaster.