FRBNY Suspends Nowcast Reporting Due to Volatility in Data and Uncertainty Around COVID Pandemic
Posted on 09/03/2021
On its website, the FRBNY states, “Suspension Notification. The uncertainty around the pandemic and the consequent volatility in the data have posed a number of challenges to the Nowcast model. Therefore, we have decided to suspend the publication of the Nowcast while we continue to work on methodological improvements to better address these challenges.”
The “nowcast” model of GDP growth from the FRBNY uses Kalman-filtering techniques and a dynamic factor model. According to the FRBNY the ultimate goal of the model is that “our model produces a “nowcast” of GDP growth, incorporating a wide range of macroeconomic data as it becomes available. With this approach, we aim to read the real-time flow of information and evaluate its effects on current economic conditions. The platform provides a model-based counterpart to the more routine forecasts produced at the bank, which have traditionally been based on expert knowledge.”
The website also states, “The New York Fed Staff Nowcast is not an official forecast of the Federal Reserve Bank of New York, its president, the Federal Reserve System, or the Federal Open Market Committee.”
Source: FRBNY Website, https://www.newyorkfed.org/research/policy/nowcast.html.
The Federal Reserve recently discontinued its weekly M2 Money Stock figures. Broader than M1, M2 is a measure of the money supply that includes cash, checking deposits, and easily convertible near money such as retail money market funds.
Keywords: Federal Reserve System.