The last update of the “GDPNOW” model of the Federal Reserve Bank in Atlanta reported that the American economy should close the First quarter of 2025 with a slowdown of the -2.8% on an annual basis. “However, as for each model, it is essential to go beyond the number and try to understand what are the dynamics below: the GDPNOW It is not a projection of the structural growth trend of the economy, but one monitoring tool who tries to predict the trend of the GDP of a given quarter by anticipating the publication of official data by 122 days, “said Jeffrey Cleveland, Chief Economist by Payden & Rygel. “Starting from its debut in 2014, the model generally reflected the progress of the royal GDP, not without some Remarkable forecasting errors (for example in the 1st quarter 2022 and in the 2nd quarter 2022) ”, he added.
Complex assessments
“Of course, even the first official reading of the GDP published by the Bureau of Economic Analysis represents a approximate and provisional estimatesince only the 40% of the actual data is available at that date. The estimates are then revised that new information is made available, sometimes with a difference of even two percentage points between the first reading and the third, the final one, “pointed out the analyst, underlining that the growth of GDP in the 1st quarter of each year is rather difficult to evaluatethanks to some non -decreased data that always appear worrying and the Christmas holidays that train the consumption of the 4th quarter.
Abnormal factors
“Two abnormal factors They could significantly influence the current esteem – explained Cleveland -. First of all, the reading of the 1st quarter is to be traced above all to personal consumption and imports And, at the moment, the model includes a flat personal consumption expenditure, decreasing compared to the previous estimate of 2.2%. However, nothing prevents a rebound in February and March. Secondly, since the GDP measures the gross “internal” product, the imports are subtracted by exportswhich become “net”. In January, an imminent of imports was recorded, which could be one -off but which determined, according to the GDPnow model, an impact in terms of net exports equal to 3.57 percentage points on GDP “. It is therefore soon to evaluate the repercussions of Trump’s duties.
“Top-down” approach
According to the analyst, the employment reports give the idea, month to month, of “Power of consumers”taking into account the number of employed workers, the hours worked and the level of salary. “In January, the nominal spending power of US consumers still recorded an extraordinary one +5.4% on an annual basis, The fastest increase for a year now and well above the long -term average of +3.6%, suggesting a large consumer spending capacity, “he underlined. The “power of consumers” represents a Good shopping indicator: its growth rate has in fact dropped on average of two percentage points compared to the peak reached 12-18 months before the beginning of each of the last three recessions, excluding the Covid-19 period. “In January, the growth rate of consumer power has increased by 1.4 percentage points on an annual basis, which means that, if we look at the monthly and quarterly volatility of the various components of the GDP, probably the US economy It is not yet found on the verge of a recession – concluded Cleveland -. Other detection models, for example those of other regional banks of the Federal Reserve, still indicate growth in the 1st quarter. Despite having slightly different approaches, all models provide precious indications, but nobody suggests a strong slowdown in the underlying growth trend “.
