The consensus on today’s US Q4 GDP report is for 2.6% q/q annualized growth in a slowdown from 3.1% in Q3.
Risks are to the downside.
That’s because yesterday two critical inputs for the report were released and both missed badly. Wholesale inventories were lower by 0.5% after a 0.2% decline in November and the advance goods trade deficit for December was 122B compared to 105B expected.
With those, the consensus on GDP has ticked to 2.6% from 2.7% but most economists don’t adjust their forecasts so late in the game.
To get a sense of how deeply those misses sting, the final Atlanta Fed GDPNow estimate was cut to 2.3% from 3.2%. That number is probably a good indication of where the market is now priced for GDP, though with so many cross-currents in the market, today’s report could still catch many off guard.
At the same time, the bond market appears to have noticed with Treasury yields down 3-6 bps across the board ahead of GDP, which is due at the bottom of the hour.