The Atlanta Fed is seemingly predicting -2.8% GDP growth in the first quarter of 2025.
I've seen several people mention this on Twitter, but it doesn't seem to be discussed much beyond that, and the stock market seems pretty normal (S&P 500 down 2% in the last month).
Is this not really a useful signal? Or is the market under-reacting?
This economist thinks the reason is that inputs were up in January and the calculation is treating that as less domestic production rather than increased inventories:
OK, so what can we say about the current forecast of -2.8% for Q1 of 2025? First, almost all of the data in the model right now are for January 2025 only. We still have 2 full months in the quarter to go (in terms of data collection). Second, the biggest contributor to the negative reading is a massive increase in imports in January 2025.
[...]
The Atlanta Fed GDPNow model is doing exactly that, subtracting imports. However, it’s likely they are doing it incorrectly. Those imports have to show up elsewhere in the GDP equation. They will either be current consumption, or added to business inventories (to be consumed in the future). My guess, without knowing the details of their model, is that it’s not picking up the change in either inventories or consumption that must result from the increased imports.
https://economistwritingeveryday.com/2025/03/05/understanding-the-projected-gdp-decline/
This economist thinks the reason is that inputs were up in January and the calculation is treating that as less domestic production rather than increased inventories:
https://economistwritingeveryday.com/2025/03/05/understanding-the-projected-gdp-decline/