The Federal Reserve Bank of Atlanta’s GDPNow model is now projecting a 3.7% contraction in US economic activity for the first quarter of 2025, according to data released on April 1.
The estimate represents a significant deterioration from the -2.9% reading reported just days earlier on March 28, suggesting rapidly worsening economic conditions as the quarter concluded.
The Atlanta Fed’s tracking chart also displays a “Gold adjusted GDPNow” calculation that shows a slightly less severe contraction than the headline figure. This alternative measure, implemented on March 6, 2025, specifically adjusts for the volatile effects of gold imports and exports on GDP calculations by subtracting gold trade from the balance of payments measures.
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“Gold trading can create significant volatility in economic data without reflecting underlying economic activity,” the Fed explains in its technical documentation. The adjustment involves sophisticated statistical modeling to separate gold-related fluctuations from broader economic trends, providing policymakers with an alternative view of growth patterns.
“After this morning’s construction spending report from the US Census Bureau and incorporation of the available March data into the model’s dynamic factor model, including manufacturing data from Institute for Supply Management and measures of consumer attitudes from two surveys, both the standard models and the alternative models forecasts of first-quarter real final sales to private domestic purchasers growth declined,” the Atlanta Fed explained.
The GDPNow model, which aggregates statistical forecasts from 13 subcomponents, serves as a running estimate of GDP growth prior to the official Bureau of Economic Analysis report. The Atlanta Fed emphasizes that it is not an official forecast and does not capture the potential impacts of recent economic events beyond the statistical model’s parameters.
The next GDPNow update is scheduled for Thursday, April 3.
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