By Richard Leong
NEW YORK (Reuters) - The New York Federal Reserve will launch a weekly gauge of the U.S. economy at a time when investors are concerned about slowing overseas demand and wild swings across financial markets.
It said on Tuesday it will launch its "FRBNY Staff Nowcast" GDP readings on Friday.
The New York Fed is known for having an ear on Wall Street due to its role conducting daily market operations for the entire U.S. central bank system.
It is unclear whether the bank's forecast model on gross domestic product will be more accurate than the Atlanta Fed's closely watched GDP model and top-tier economists' forecasts.
"It provides some healthy competition because it would produce better results for everyone," said Jim O'Sullivan at High Frequency Economics in Valhalla, New York, who was the top U.S. economic forecaster in Reuters polls in 2014 and 2015.
As of April 8, the New York Fed's estimate on U.S. gross domestic product was a 1.1 percent annualized increase for the first quarter and a 1.9 percent pace for the second quarter.
"The platform provides a model-based counterpart to the more routine analysis at the bank, which has traditionally been based on expert knowledge," the New York Fed said of its GDP measure.
In comparison, the Atlanta Fed's "GDPNow" on Friday showed only a 0.1 percent annualized rate for the first quarter following a string of weaker-than-expected data on consumer spending, manufacturing and trade.
In addition to less-frequent updates, the New York Fed GDP model incorporates more data in its GDP outlook than its Atlanta Fed counterpart.
On its website, the New York Fed lists the monthly ADP National Employment Report as an input for its GDP estimate. The Atlanta Fed does not use the data on private employment.
All forecasting on GDP involves some guessing on trade and inventories, which are notoriously volatile, said Ethan Harris, head of global economics at Bank of America Merrill Lynch.
Harris, who previously was an economist at the New York Fed, said his current first-quarter GDP estimate, which shows nil growth, is more aligned with the Atlanta Fed's current figure than the New York Fed's stronger reading. "I believe in my own model," he said.
It will take time for the New York Fed model to prove its forecast precision, Harris and O'Sullivan said.
"All these models are not perfect. I'm withholding judgment for now," said O'Sullivan.
(Reporting by Richard Leong; Editing by Matthew Lewis and Dan Grebler)