Recession? Q3 to Deliver Strongest U.S. GDP Growth in Nearly 2 Years

investing.com:

It’s been clear for some time that US recession risk has been sliding in recent months, but this week’s updates of a widely followed GDP nowcast published by the Atlanta Fed has been revised up – a lot – for the third quarter.

According to this model, the US economy isn’t just rolling along at a moderate pace — it’s surging.

US output is on track to increase 5.8% in Q3 for the real, seasonally adjusted annual rate, the GDPNow estimate for Aug. 16 shows. That follows the previous day’s sharply upgraded estimate of 5.0%.

If the current forecast for 5.8% is accurate, the economy’s growth rate is set to more more than double from Q2’s rise and will mark the strongest gain since 2021’s Q4.

Another nowcasting model published by Economy.com also shows a strong pickup in Q3 growth. This Aug. 15 estimate indicates output will rise 4.0% in the current quarter. While that’s far lower than the GDPNow estimate, it still ranks as a robust acceleration in economic activity.

Is it time to pop the champagne corks? Not yet. Although this pair of nowcasts paint a bullish picture for the economy that breaks to the upside vs. recent history, nowcasting models can be volatile, so incoming data could quickly reverse the latest upgrades in a flash.

The key question: How will other Q3 estimates fare in the days and weeks ahead?

My preferred nowcast monitoring tool is combining several estimates and tracking the changes, which is a more robust methodology for nowcasting than relying on any one model.

On that note, the pair of sharply upgraded nowcasts cited above have yet to move the needle in CapitalSpectator.com’s median estimate for the current quarter, which is still 2.0% for Q3 – unchanged from Tuesday’s update.

It may turn out that Q3 data