By Kevin Kliesen, Business Economist and Research Officer
The St. Louis Fed’s Economic News Index (ENI) predicts that real gross domestic product (GDP) will increase at a 3.1 percent annual rate in the fourth quarter. (See figure below.) The current estimate is up slightly from the previous week’s estimate, but it is about 1 percentage point less than its highest estimate of 4 percent in early December 2016.
If real GDP advances at a 3.1 percent rate in the fourth quarter, then the U.S. economy will have grown by 2.2 percent in 2016, modestly stronger than the 1.9 percent gain seen in 2015 (measured on a fourth-quarter-to-fourth-quarter basis).
For those who are unfamiliar with the St. Louis Fed’s ENI, our projection uses economic content from key monthly economic data releases to forecast the growth of real GDP during that quarter.1 This simple-to-read index is updated every Friday.
1 See Grover, Sean P.; Kliesen, Kevin L.; and McCracken, Michael W. “A Macroeconomic News Index for Constructing Nowcasts of U.S. Real Gross Domestic Product Growth,” Federal Reserve Bank of St. Louis Review, Fourth Quarter 2016, Vol. 98, Issue 4, pp. 277-96. The ENI will not produce forecasts for the major components of GDP, such as real nonresidential fixed investment.