On another set of horrid trade data, the GDPNow forecast ends on a low note.
Gold Adjustment Background
Pat Higgins at GDPNow has made official adjustments to its model to account for gold imports.
The base model doesn’t adjust for gold imports/exports but the BEA does.
Gold bars and bullion are considered financial assets and gold imports have soared along with other imports, front-running tariffs.
For discussion, please see my March 27, 2025 GDPNow Discussion.
The gold-adjusted numbers are the ones to follow. Starting February 28, my chart only shows the adjusted numbers.
Latest Developments
- The advance economic indicators took 1.1 percentage points off the Nowcast to -1.5 percent.
- The advance economic indicators took 1.2 percentage points off Real Final Sales to -1.8 percent.
- Change in Private Inventories (CIPI) rose by 0.11 percentage points on the Advance Wholesale Inventory numbers
The Key Number
Real Final Sales is the important number. The difference between the Nowcast and RFS is CIPI adjustment that nets to zero over time.
Looking ahead, I wonder about inventories because of all the tariff front-running of parts and general merchandise from highly-tariffed nations.
The Bloomberg Econoday consensus is +0.2 percent in a range of -1.5 percent to +1.1 percent.
My Estimate for Real Final Sales on March 27 in reader comments was -1.4 percent. I will stick with that.
I suspect GDPNow may be a bit off on its gold adjustment for March.
Related Posts
April 29, 2025: New Record Goods Trade Deficit on More Tariff Front Running
The goods deficit is a record -162 billion for March.
How Long Will Front-Running Tariff Inventories Supply Shelves?
Yesterday, I asked How Long Will Front-Running Tariff Inventories Supply Shelves?
I concluded about a month on average. Factoring in today’s trade data add another few weeks. Click on above link for details.
April 27, 2025: Shipping Collapse: Port Workers and Truckers Wait for the Ships to Come In
Orders have been cancelled, but the primary impacts are not felt yet.
Addendum
Not Sure how GDPNow estimated gold today.
There is no breakdown on the advance report. If it threw the entire trade deficit as regular imports, its GDP estimate is probably too low. But it could go the other way.