Atlanta Fed introduces new GDP estimation model adjusted for gold trade

The Federal Reserve Bank of Atlanta is changing the parameters of its GDP estimation model by adjusting for the recent surge in US gold imports.The Atlanta Fed’s GDPNow model provides a running estimate of real GDP growth based on available economic data for the current quarter, using a similar methodology as US Bureau of Economic Analysis (BEA), which provides the official GDP reports.This “nowcast” model, according to the bank’s policy adviser and economist Patrick Higgins, is “sometimes an outlier relative to professional forecasters” due to its accounting of gold imports as well as the treatment of some GDP subcomponents, for which its model has a weaker outlook.According to the Atlanta Fed, rising stockpiles of gold have artificially depressed its nowcast model by widening the US trade deficit. The BEA’s method does not include the metal under the investment component in its GDP calculation, as the bank pointed out.As a result, the Atlanta Fed has introduced a new model that it believes better accounts for the gold movement than what the BEA uses.According to data from USA Trade Online, US imports of physical gold such as bars — which are categorized as “industrial supplies and materials” — surged from $2.08 billion in November of 2024 to $28.69 billion in January 2025, before falling back a bit to $22.96 billion in February 2025.“It’s also plausible that gold imports could meaningfully distort the (current) standard model’s nowcast in the second quarter — hence, the switch,” Higgins said.The alternative model forecasts a 0.1% decrease in first quarter GDP (seasonally adjusted annual rate) as of April 17, compared with the -2.2% estimated by the standard model.Source: Federal Reserve Bank of AtlantaThe bank has been using the gold-adjusted model since early last month and plans to make it available through April 29. After that, it will replace its standard GDP forecast model with the new model.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com