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Data from Atlanta Fed, chart by Mish

In addition to the update on gold, we also have an advance look at how today’s jobs report boosted GDPNow.

Pat Higgins, creator of GDPNow explains on Linked-In, For GDP Forecasters, Some Gold Doesn’t Glitter

We generally take a hands-off approach in updating and distributing our GDPNow model forecasts. With one exception, once a forecast quarter begins, the code of the model does not change. Any tweaks to the model are made at the beginning of the subsequent quarter.

The one exception was in spring 2020, when changes were made so that some monthly indicators showing steep declines early in the COVID-19 pandemic wouldn’t be treated as outliers and ignored as they normally would.

While not on that level, the unusual widening of the January trade deficit that led to much of GDPNow’s sharp decline on February 28, and the circumstances surrounding that decline, was also unprecedented in one respect. That is, as we now know from the March 6 full international trade report—but could only strongly suspect based on anecdotal and non-US government data until then—much of the widening of the trade deficit in January was due to an increase in nonmonetary gold imports from $13.2 billion in December to $32.6 billion in January. This accounted for nearly 60 percent of the widening of the goods trade deficit.

Although GDPNow does [not] distinguish gold from other imports, the Bureau of Economic Analysis does, in tallying up the total of the net exports, subaggregate within GDP. Removing gold from imports and exports leads to an increase in both GDPNow’s topline growth forecast and the contribution of net exports to that forecast, of about 2 percentage points. The topline growth forecasts also increased today—standard model -2.4 percent to -1.6 percent, “gold adjusted” model -0.4 percent to 0.4 percent—as data from today’s labor market report came in stronger than the model was expecting based on the limited February data the model received prior to that release.

The attached forecast tables include both the standard GDPNow forecast and the gold adjusted forecast. We will continue to update the standard GDPNow model through at least the end of the quarter but will add at least some occasional updates from the gold adjusted version as well.

GDPNow Gold Update

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The above update shows the top-line estimate to GDPNow.

Real Final Sales is the more important bottom-line number. The difference between the two is Change in Private Inventories (CIPI) that nets to zero over time.

Higgins doesn’t show Real Final Sales reflective of today’s unemployment report but I will take a stab at (+0.8 for Employment – (0.57 – 0.43) for CIPI), a net of +0.64 to (-2.8 + 2.0) = -0.16.

We will find out on Monday.

If +2.0 to the Nowcast for gold applies to Real Final Sales as well (I have a question into Higgins), then I will post gold-adjusted numbers going forward on my charts, with a note.

I see little reason posting numbers known to be wrong.

Employment Added to GDPNow

Higgins said “ today’s labor market report came in stronger than the model was expecting based on the limited February data the model received prior to that release.“

As I have commented, it’s not the data that matters (the report was bad), it’s the data vs what the model expected (not what economists expected).

Today, the jobs consensus was 160,000 vs an actual of 151,000 with significant negative revisions too.

But for whatever reason (I strongly suspect wage growth), the model liked today’s report, boosting PCE spending estimates by 0.42 percentage points.

Related Posts

March 7: Employment Drops by 588,000 as Jobs Increase by Weaker Than Expected 151,000

Beneath a weak headline jobs number, the details are even weaker.
Total full-time work dropped by 1.22 million.

March 7, 2025: A Historical Look at Unemployment Rates Heading Into Recessions

In 1994, the BLS made huge changes in the calculation of the unemployment rate. So that’s all the further back I look.

March 6: Trump Makes Imports Great Again With Two New Record Trade Deficits

The Census Department reports two new records trade deficits in January.

It was the gold in those imports that hammered the GDPNow forecast.

But please note that even the gold-adjusted base forecast is down 2.9 percent to 0.4 percent in less than a month. Real Final Sales is nearly flat if not negative.

Factor in tariff gyrations and DOGE layoffs and we are headed for a negative quarter.

Addendum

For those unaware, I was adjusting GDPNow before Higgins’ Link-In post.

For discussion, please see How Did Gold Imports Exacerbate the Huge Decline in GDPNow Nowcast?

More By This Author:

Employment Drops By 588,000 As Jobs Increase By Weaker Than Expected 151,000
A Historical Look At Unemployment Rates Heading Into Recessions
Trump Makes Imports Great Again With Two New Record Trade Deficits