US Q4 GDP Nowcast Still Points To Moderate Growth

The recession that was widely predicted when the year began has only been postponed, some forecasters warn. The US is likely to contract at some point in the new year, runs the updated outlook. Maybe, but 2023 remains on track to exit this year in a growth mode, according to the latest nowcasts.

US output for Q4 is projected to increase at an annualized 2.0% for GDP in the final three months of 2023, based on the median for a set of estimates compiled by The current nowcast reflects a sharp deceleration from the 4.9% surge reported for Q3, but today’s revised Q4 median data still suggests that recession risk will remain low for the remainder of the year.

Today’s update for Q4 output is virtually unchanged from the previous estimate published on Nov. 16. The stability is encouraging because it suggests that incoming data aligns with a moderate growth trend.

If the current median estimate is correct, US economic activity appears set to return to a “normal” expansion, i.e., the pace that prevailed before growth temporarily ramped up in Q3. The question is whether a ~2% trend is sustainable in 2024?

Looking at economic profiles for each of the individual US states suggests recession risk may be rising. “At a nationwide level, the number of states exhibiting economic growth went from 33 over the prior 3 months to just 16 in October,” advise DataTrek Research’s Nicholas Colas and Jessica Rabe. “The comparison for states showing outright contraction over the same two timeframes went from 16 to 27.”

Although the net effect is still biased toward growth, the trend may be weakening. The current growth bias ”should be enough to keep the US economy as a whole from falling into recession this quarter,” Colas and Rabe conclude. “How these trends develop through the balance of Q4 will tell us a lot about the state of the US economy as we enter 2024.”

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