The weather is beautiful in the Northeast and Midwest USA.
But the Q2 GDP forecast is gloomy. In fact, The Atlanta Fed’s GDP NOW forecast model shows Q2 GDP of only 0.7 percent.
Here is the breakdown:
I am sure that Joe Lavorgna at Deutsche Bank is overly optimistic. But MY forecast model says something different.
Mortgage applications decreased 3.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 8, 2015.
The unadjusted Purchase Index increased 0.1 percent compared with the previous week and was 12.4 percent higher than the same week one year ago.
Of course, mortgage purchase applications remain in the doldrums thanks to declining wage growth. And home prices keep rising!
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.00 percent, its highest level since March 2015, from 3.93 percent, with points increasing to 0.36 from 0.35 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
The talking heads on TV kept saying “Q1 was bad weather, so there should be a BIG pent-up demand in the economy. So Q2 should be gangbusters!
The Atlanta Fed GDP NOW, which correctly forecast the dismal Q1 growth rate of 0.2% QoQ, is now forecasting Q2 GDP growth at a dismal 0.9% QoQ.