Yes, based on trade data and inflation analysis. Explanation below.
The GDPNow Estimate is 2.0 percent as of March 23, 2026.
Understanding GDPNow
GDPNow is a “Nowcast Estimate” not a prediction. It’s a running estimate of what the BEA would report IF the BEA were to produce a GDP report at the current time.
Initial estimates often look and often are ridiculous. That’s not a bug it’s a design feature.
As economic reports come in, the nowcasts tend to stabilize, at least somewhat.
GDPNow March 2023 Numbers
- GDP Nowcast: 2.0 percent
- GDP Real Final Sales: 1.5 percent
- GDP Real Final Private Domestic Sales: 1.8 percent
Real Final Sales vs GDP
The difference between GDP and Real Final Sales (RFS) is Change in Private Inventories that nets to zero over time.
RFS is the actual bottom line number. For that reason, the BEA would be wise to throw the headline number in the garbage.
The Fed focuses on Real Final Private Domestic Sales. It’s currently between RFS and the topline estimate, but it could be the highest or lowest. It just happens to be in the middle now.
What Happened on March 12?
On March 12, the January 2026 full trade report showed a sharply narrower trade deficit ($54.5B vs. ~$66B expected by consensus). Exports surged, imports dipped.
The GDPNow contribution from net exports improved from –0.50 pp to –0.32 pp, and the headline nowcast jumped from 2.2% to 2.7%.
That lift wasn’t because January trade was “strong” in absolute terms — it was because the data came in much better than GDPNow had been projecting.
The model had been carrying a more pessimistic view of net exports heading into that release.
January Trade Data
My view is that January trade data, especially imports, were weak because importers held back waiting for the Supreme Court tariff decision.
On February 20, the Supreme Court ruled against Trump. Then the International Trade Court mandated refunds.
I now expect a surge in imports reversing the January numbers.
Given typical 20–36 day ocean transit + clearance, the real “mad rush” import catch up lands mostly in March data.
This Friday, we see advance trade numbers for February. Nothing will surprise me here. But GDPNow will not use that number
On April 1, we have the full international trade data that GDPNow will look at. That data is for February. So take any GDPNow change on April 1 with a big dose of salt.
I expect the full brunt of imports to hit in March with perhaps a bit of spillover into April. Thus, I expect GDPNow to be skewed on the high side until the full March trade data release.
GDPNow Estimated Contributions to 2026 Q1 GDP
As of March 23, net exports are imports at -1.43 PP + exports at 1.09 PP = -0.34 PP.
GDPNow Contribution for Net Exports
Key Point on Analyzing GDPNow Reports
It’s not the data that matters, but rather what the GDPNow model expected that really matters.
GDPNow did not react to the data on the 12th per se. It reacted to the data vs its expectation of the data. Very few people understand this key point.
This is why people don’t understand how the model often reacts opposite the data reports.
It’s “possible” the model now expects worsening trade. However, the history for net export contribution suggests the model does not expects trade data to worsen.
I do, for reasons stated. Thus I expect the model’s expectation is too high, and that is what really matters.
CPI and PCE Inflation
Higher inflation will reduce real GDP.
Due to the war in Iran, there is going to be a surge in reported inflation.
That’s my second reason to expect a weaker forecast than the current GDPNow estimate.
I doubt the model expects the upcoming inflation reports.
Finally, I expect jobs to continue to weaken, and consumer spending along for the ride. That’s a third reason to suspect the Nowcast is too high.
If so, the combination of trade data, inflation, and weakening spending could easily sink the GDPNow estimate towards zero.
Q: GDPNow Still Too High?
A: Yes, for two or three reasons
Models vs Humans
- The problem with models is they can’t think. They are only as good as the human (or AI) making the model.
- The problem with humans is they overthink, think about the wrong things, and have expectation biases.
GDPNow is just a tool, but a very good one provided you understand the above points. I appreciate the GDPNow model.
Related Posts
February 20, 2026: Supreme Court Strikes Trump’s Reciprocal Tariffs In 6-3 Vote (I Told You So)
Forgive me for bragging, but I got every justice correct.
March 11, 2026: Year-Over-Year CPI Inflation Will Worsen for at Least Three Months
This is an easy forecast. And it does not even include gasoline prices.
Do models expect that?
March 20, 2026: The Odds of at Least One Fed Rate Hike by October Surge to 25 Percent
What happened? Two things discussed below.
The best GDP is yet to come!
Is it possible?
I wonder why GDP is sinking while weapon production
is at fastest pace for 2 wars.
The US Treasury auction had to be extended due to a lack of buyers at this yield.
Just wait till Congress hands Trump $200 billion more for Israels war. I smell a credit downgrade in the not so distant future.
Being Human, I often overthink as MIsh suggests and here’s my take:
GDP is in for a move to the downside. Why?
Export volume and export revenue will rise precipitously due to the war. Many nations will have to reduce production and import items they can not longer produce at home.
Export oil and gas prices have risen roughly 50%, volumes are up as well. This windfall of pricing strength will reduce the deficit bigly.
Global economic conditions are slowing quickly in response the the war.
Inflation is rising quickly with the increase in fuel and fertilizer prices.
8% of global aluminum production has vanished. Expect price increases.
The historic flight to liquidity implies a lower velocity of circulation. We have stagflation.
Oil imports to the US will increase due to price increases from the war that Trump started. Of course Trump will say that the increase in the trade deficit with Canada caused by the oil price increases is more evidence of Canada ripping off the US. This will cause Canada to build another pipeline to the west coast so that more oil can be exported from Canada to China so that China will not be so reliant on the middle eastern oil and Canada will not be so reliant on the US as a customer.
The US is good a lot of things. Foreign policy is not one of them.
Canada is also a major source of fertilizer imported to the US, especially potash. If Herr Trump does not want Canada’s fertilizer, I am sure Canadian farmers will be able to sell it to other countries.
Ship it to ca. ca will not have to worry about the jones act when getting oil from texas.
Ca has a lot of whacky policies. But so is the jones act. I wonder if the refineries closing are due to those policies or are the just old and not competitive compared to imported. They had been polluting for years got a slap on the wrist for doing so. Threaten to leave if the state did not bail them out. So either way the citizens would be paying.
Papa dave your thoughts.
Honestly I think it could end up in the negative soon. There isn’t a single thing driving this economy to grow. There are a ton of factors working to make it shrink, however.
= watch MSFt stock price (=Microsoft)
and it is most diversified company in world
it makes money in windows
it makes money in mobile/android (bunch of patents)
it is #2 IN CLOUD , after amazon
it is major investor in AI, owns partly OpenAi
THERE IS NO BOTTOM FOR PRICE!
alx
USA gov runs now 3 trln deficit in 2026. USA gov collects 5-5.5 trln in taxes
if USA tried to cut deficit in half, so USA gdp nominal would fall 5% nominal, and in reality it would be 8*10 % . INSTANT GREAT DEPRESSION VER. 2.0
USA is just banana republic on steroids
alx
We have nuclear bananas.
I hope you like the taste.
They never go bad!
The U.S. national debt is projected to hit $40 trillion before the fall 2026 elections, with some estimates suggesting it could reach this mark before the end of the fiscal year on September 30, 2026. The debt recently crossed the $39 trillion mark in March 2026, adding $1 trillion in less than five months.(from Google AI)
Complete collapse is assured.
How long? Who knows.
At what debt level? 100T? 200T? Who knows.
Social Security = gone
Medicare = gone
All social programs = gone
UBI = will be the hail Mary
Then it’s over.
Folks that are self sufficient: farmers, Amish, etc might weather the storm and come out the other side
City dwellers face certain death by murder, starvation, dehydration, etc
Funny how Team R were gnashing their teeth and rending their garments over budget deficits, until Cheeto took office again.
Then, just like that, they stopped pretending to care.
The same people benefiting from current polices will be the same ones to buy up everything when it goes south