GDPNow
On March 3, 2025, the Atlanta Federal Reserve's GDPNow model estimate for real GDP growth in the first quarter of 2025 was -2.8 percent. This estimate represented a significant decline from the previous estimate of -1.5 percent on February 28, 2025. The sharp decline from 2.3% growth to a -2.8% contraction signals potential economic challenges.
While not an official forecast, GDPNow serves as an early indicator of economic trends, allowing businesses and policymakers to prepare for potential downturns. The forecast can influence market sentiment and investor behavior. A projected contraction may lead to increased caution among investors and businesses.
What is GDPNow?
GDPNow is a forecasting tool developed by the Federal Reserve Bank of Atlanta that provides a real-time estimate of U.S. Gross Domestic Product (GDP) growth for the current quarter. Unlike traditional economic forecasts released periodically, GDPNow offers a continuously updated "nowcast" of GDP based on available economic data.
Key features of GDPNow include:
Real-time estimates: The model updates its GDP growth projection as new economic data becomes available, providing a current view of the economy.
Data-driven approach: GDPNow uses a statistical model that incorporates a wide range of macroeconomic indicators, such as manufacturing data, housing starts, and trade balances.
No subjective adjustments: GDPNow uses a methodology similar to the U.S. Bureau of Economic Analysis (BEA) but relies on mathematical calculations without subjective adjustments.
Transparency: The Atlanta Fed provides detailed information about the model's methodology and underlying data sources.
Accuracy comparison: GDPNow's forecasts have shown comparable accuracy to consensus forecasts from professional economists.
Official GDP
Official GDP refers to the comprehensive measure of the monetary value of all finished goods and services produced within a country's borders during a specific time period. In the United States, official GDP is calculated by the Bureau of Economic Analysis (BEA) and released quarterly in real terms, adjusted for inflation.
It's important to note that GDPNow is not an official forecast of the Atlanta Fed, but rather a tool to provide a running estimate of GDP growth based on available data.