(Click on image to enlarge)

The baseline GDPNow Nowcast is 2.6 percent up slightly following Thursday’s nonfarm payroll jobs report.

The difference between the nowcast and real final sales is Change in Private Inventories (CIPI) that nets to zero over time.

Real Final Sales vs Real Final Private Domestic Sales

• The GDPNow nowcast for real final sales is 4.8 percent.
• The Nowcast for real final domestic sales is 1.2 percent.
• The Nowcast for real final domestic sales is 1.0 percent.

Percentage Point Current Contribution to GDP Estimates

• Personal Consumption Expenditures: 1.08
  • PCE Goods: 0.60
  • PCE Services: 0.48
• Gross Private Domestic Investment: -2.32
  • Nonresidential: 0.09
  • Residential : -0.27
• Government: 0.40
  • Federal: 0.14
  • State and Local: 0.27
• Imports: 3.82
• Exports: -0.37

Are Imports Adding to GDP?

No, imports have no impact on GDP by definition. Imports are not domestic.

However, the BEA subtracts imports to account for products sold that were not not domestic.

For example, if you buy a made-in-China lawnmower from Home Depot, that sale gets totaled up as a domestic sale. Accounting necessitates subtracting imports to remove a sale that never should have been added.

Using this methodology, imports currently add 3.82 percentage points to the nowcast because imports collapsed following a front-running surge in the first quarter.

Gross Private Domestic Investment

The percentage point contribution for GDPI is -2.32.

If you total residential and nonresidential, you arrive at -0.18.

The difference turns up in CIPI which the Nowcast at -2.13.

2025 Q1 Annualized Comparison

• Real GDP: -0.5 percent
• Real Final Sales: -0.8 percent
• Real Final Domestic Sales: 1.5 percent
• Real Final Private Domestic Sales: 1.9 percent

In the first quarter GDPI contributed 3.90 percentage points of which CIPI was 2.59 PP.

So CIPI will swing from 2.59 to -2.13 assuming no revisions (but I would not make that assumption).

Impact of Tariffs

The impact of on-off tariffs and tariff front-running is causing all of these distortions.

The BEA’s GDP Revisions to first-quarter GDP made for a record gap between real final sales and real final domestic sales in the GDPNow nowcast.

I am sure we are not done with revisions and wild swings. GDP is very difficult to estimate in these conditions.

I think the Nowcast is on the high side for the baseline number of 2.6 percent.

Related Posts

June 26, 2025: Unexpected Huge Negative Revisions to First-Quarter GDP and What it Means

The BEA revised GDP lower by 0.3 percentage points. The details are worse.

June 16, 2025: QCEW Report Shows Overstatement of Jobs by the BLS is Increasing

The discrepancy between QCEW and the BLS jobs report is rising.

June 17, 2025: Retail Sales Down Much More than Expected, Drop 0.9 Percent

Retail sales declined 0.9 percent led by autos down 3.5 percent.

July 3, 2025: The Rise in Continued Unemployment Claims Shows Difficulty in Finding a Job

If you lose a job, it is increasingly difficult to find one.

More By This Author: