The US first quarter GDP report is proving to be one of the toughest ones for economists to forecast since the pandemic. The range from professional economists is -1.5% to +1.7% and the range from models is even wider.
Now I would argue that there is so much noise in the report that it shouldn’t be a market mover, particularly since the revisions to the advance report can be large in the prelim and final data. Moreover, what the market should really be concerned about is how tariffs impact the economy, not about what happened in January.
In any case, I suspect it will be a market mover anyway or at least a talking point in political circles.
The most-closely followed model of GDP is from the Atlanta Fed as it’s had a good track record in predicting the advance readings, and it was also the first regional central bank to dive in. It’s model is at -2.5% but it accounts for gold imports, which should be adjusted and bring that to -0.4%.
In contrast, the reading from the NY Fed is +3.1% and Atlanta Fed is at +2.6%, both way above consensus, which is at +0.3%.
Finally, note that on Tuesday (the day before GDP), we get US data on trade balance for March and wholesale inventories for the same month. Those will be critical last-day indications for GDP and could lead to large swings in what’s expected from the market.
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