Yesterday the Atlanta Fed updated their GDPNow forecast with a dramatic drop for the 1st quarter. This tool is updated every few days and the next update is on Monday 3/3/2025.
Can the economy drop off the cliff that fast? Guess we will have to wait and see.
Further reading is here.
All the Lead, Coincident and Lagging Indicators so far do not correlate a ‘cliff hanger recession’ forthcoming . But that is rear view monitoring.
LEI) for the US fell by 0.3% in January 2025 to 101.5
CEI) for the US rose by 0.3% in January 2025 to 114.3
LAG) for the US increased by 0.5% to 119.3
I saw a pretty good post by George Pearkes (sp?) about it.
It might be an artifact of companies importing a ton of materials (but not using them this quarter) to get ahead of expected tariffs. If that’s the case you’d see a huge “contraction” followed by blockbuster “growth” the following period as inventories are drawn down.
I think we’re going to see a recession this year for other reasons, but I don’t think we’re there yet.
Since Government Spending has a very large impact on GDP couldn’t some of this FED forecasting be based on slowed Government spending? Remains to be seen if we actually do reduce net spending, but it’s a part of the conversation for the first time in a long time.
Hope this is not political, or at least not in a partisan way, but at times I wish the policy in Washington wasn’t so fixated GDP and would include more focus on individual quality of life metrics like Per Capita PPP, etc.
JP-
I think GDPNow is based on the same published reports we all see with the data plugged into their model.
No doubt that the contribution of net exports muddled the report. Some news analysis interpreted the decline as signaling more rate cuts sooner than later. My take was simply that the current level of uncertainty and volatility makes less risky investments more attractive.