On Friday, I noted: Q1 GDP Tracking: Wide Range, GDPNow Goes Negative
GDPNow from the Atlanta Fed went strongly negative in the most recent reading: “The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2025 is -1.5 percent on February 28″.
GDPNow is an excellent tracking model, however, the January surge in imports – especially for gold – caused the model to move negative. As the Atlanta Fed noted: “the contribution of net exports to first-quarter real GDP growth fell from -0.41 percentage points to -3.70 percentage points”.
Usually there would be an offsetting increase in inventories, but that is a lagging indicator. This is a short-term distortion and will balance out over the next month or so. I don’t expect negative GDP in Q1.
