GDP Growth Is About To Explode

Black Friday and Cyber Monday dates of November 2021


Last Wednesday multiple economists significantly increased their GDP growth forecasts for the December quarter. While the September quarter’s growth seems to be just above 2% after two quarters of 6% plus growth, it appears that December’s quarter growth could even be significantly above the first half growth rates.

The U.S. Bureau of Economic Analysis estimates that September quarter’s growth was 2.1%. The chart below shows the range of various analysts’ projections for the December quarter from 7.0% to 9.0%. The graph is distorted due to the extremely low growth rate in the June quarter last year and the subsequent rebound in the September quarter.

If growth comes in at 7.0% or higher that would be the best quarter, except for the September 2020 quarter, since June 2000’s 7.5%. The best 8.0% or better quarter was back in March 1984. While the latest Covid variant could impact the final result, its full impact, if there is one, probably won’t show up until next year.

GDP Growth

GDP growth

U.S. Bureau of Economic Analysis

Atlanta Fed model has GDP growth at 8.6%

The Federal Reserve Bank of Atlanta publishes data and a graph that estimates the GDP growth rate for the current quarter. The GDPNow model is showing the December quarter to have 8.6% growth compared to the Blue Chip consensus range of 3.7% to 6.2%. Keep in mind that the Blue Chip estimates shown in the graph are about three weeks old (there is a delay between the numbers in the graph and their current forecasts).

Also, the Atlanta Fed’s GDPNow projection is based on a formula from previous quarters and the impact of Covid-19 could have a material influence on the estimate.

U.S. December quarter GDPNow forecast

Federal Reserve Bank of Atlanta, Blue Chip Economic Indicators and Blue Chip Financial Forecasts

Gregory Daco at Oxford Economics is at 8.0%

Gregory Daco is the Chief U.S. Economist at Oxford Economics. In a tweet on Wednesday he raised his growth estimate from 5.6% to 8.0%. It had been 5.2% as of November 9.

Jefferies is at 9%

On a weekly basis Aneta Markowska, Jefferies Chief Economist, and Thomas Simons, Jefferies Money Market Economist, publish a report titled “Tracking the Reopening of the U.S. Economy with Real-Time Data.” It is a compilation of various economic indicators showing how the economy is performing long before many official U.S. government reports are generated.

In Monday’s report they wrote, “The JEF US Economic Activity Index rose by 1 point last week to 102.7, which marks a new post-pandemic high. As life continues to return to normal, consumers are unleashing their excess savings, as evidenced in robust card spending and rising retail foot traffic. The influx of foreign travelers is reinforcing the strength of the domestic consumer, with all signs pointing to robust November retail sales.”

On Wednesday when they increased their forecast they wrote, “Real consumption is now on track for 6% growth, which is remarkable in the face of rapidly rising prices (and which is more consistent with demand-pull rather than cost-push inflation). On top of that, US exports are on track to increase sharply in the December quarter, and inventories are now additive to growth. Housing has clearly bottomed and capital expenditure momentum is improving as well after stalling in the September quarter.”

They added, “We were already assuming robust growth in the fourth quarter, but today\’s data point to even more upside. We are thus revising our fourth quarter GDP estimate from 7% to 9%.”

Jefferies U.S. Economic Activity Index


J.P. Morgan is at 7.0%

Michael Feroli and Daniel Silver at J.P. Morgan raised their growth estimate from 5.0% to 7.0% on Wednesday. In their note they wrote, “This morning we received a slew of data reports relating to October spending, and they were generally a fair bit stronger than expected; as a result we are revising up our tracking of current-quarter real annualized GDP growth from 5.0% to 7.0%.” They added, “The overall improvement in the data may be the first fruit of the modest easing in supply chain issues evident in some of the survey data.”

Morgan Stanley is at 8.7%

Ellen Zentner is the Chief U.S. Economist at Morgan Stanley. On Wednesday she wrote, “An increase in income driven by wage compensation paired with very strong spending, lowered the saving rate from 8.2% to 7.3%. Incorporating the wealth of data today, including GDP revisions to the September quarter, more robust spending, strong inventories, strong durable goods orders, and upside in new home sales, we significantly raise our fourth quarter GDP tracking from 3.0% to 8.7%.”