Is GDP Growth Really All About Oil?
What the Macro Correlation Matrix Is Signaling
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Atlanta Fed GDPNow model just cut its Q1 estimate from 3.0% to 2.1% in four days.
Most commentary blames oil. But the macro factor data suggests the more important signal sits one layer deeper.
We are seeing sharp, simultaneous shifts in macro factor correlations that look more like stagflation-lite than reflation.
1. The Energy–Growth relationship has indeed flipped
Qi’s Risk Model monitors daily the pair-wise correlation matrix across macro factors (6m lookback, exponentially weighted).
Energy’s correlation with GDP Nowcast is near its most negative level in 5 yrs.
Historically oil had a small positive correlation with growth. Right now it looks more like a tax on growth.
Continue reading our analysis by downloading the PDF below
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