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The New York Federal Reserve unveiled a new tool that it has created to forecast U.S. GDP. The new tool, called the FRBNY Nowcast, will be able to compute the growth of the GDP daily using near real-time data.

Using the new forecasting tool, the New York Fed will release a weekly report called Nowcasting Report. The report will be updated on the Fed's official website starting this Friday, April 15. Even though reports will be released weekly, the FRBNY Nowcast is updated daily using almost real-time data.

Another U.S. Fed branch, the Atlanta Fed, has already launched its own GDP tracking tool before. The tool, called GDPNow, has been operating since mid-2014. According to The Wall Street Journal, investors have increasingly turned to the GDPNow especially in recent months to help them understand the pace of U.S. economic growth.

The Atlanta Fed's GDPNow has gained popularity and credibility after reporting the GDP for the first quarter of 2015. To compare the two tools, one immediate difference is that the Atlanta Fed's GDPNow uses its Q1 GDP at a meager 0.1 percent. On the other hand, the New York Fed's FRBNY Forecast has it at 1.1 percent, 1 percent higher than the GDPNow, as noted by Business Insider.

Among other GDP tracker tools currently being used and forecasts done manually, the New York Fed is confident that its FRBNY Nowcast is reliable. In the announcement, the New York Fed refers to academic studies that have been conducted regarding the subject, suggesting that the techniques used in the tool produce results comparable to, even often more accurate than, those of the best human forecasters. The tool even has some advantages compared to human forecasters in that it's automatic and free of judgement.

Even so, the New York Fed acknowledges the significant amount of noise in macroeconomic data that would interfere with the tool's estimation. With that in mind, it's also highly possible that the FRBNY Nowcast will make mistakes, just like any other economists' forecasts do.

As a response to the new GDP forecasting tool, investors are likely to average the numbers from GDPNow and FRBNY Nowcast for a better view of the U.S. economy, reports Market Watch, quoting analysts. Analysts regard the two tool as two different models that can generate different forecasts.

The New York Fed's new GDP tracker and forecaster FRBNY Nowcast has entered the forecasting landscape in U.S. economy, competing with the existing Atlanta Fed's GDPNow. The FRBNY Nowcast uses near real-time data to update GDP growth daily and provide data to release report weekly.