Pat Higgins at GDPNow has made official adjustments to its model to account for gold imports. 
What Happened?
On February 28, 2025 I commented In Scramble to Beat Tariffs, Trade Deficit Soars by Amazing 25 Percent
The advance rush to beat tariffs hugely distorted trade data in January.
Email from Pat Higgins
The model doesn’t adjust for gold imports/exports. In the GDP accounts, the BEA does make adjustments for gold as described on pages 8-13 and 8-14 of https://www.bea.gov/resources/methodologies/nipa-handbook/pdf/chapter-08.pdf when the translate the Census data on imports/exports the GDP based measures.
The advance international trade report on goods doesn’t have details beyond the major categories, but additional data on gold imports/exports will be included in the full report released next Thursday. But as mentioned, the model doesn’t make adjustments based on those gold imports/exports.
Best regards,
Pat
Pat has now made adjustments to the official model, but posts as adjustments. I see no need to post the official forecast, known to be wrong.
So I post only the gold adjustments. Prior to today (or sometime recently that I missed), Pat only posted the gold adjustment and I estimated Real Final Sales.
He is now posting both as official figures.
Expect Another Distortion
Today, I noted a Second Massive Wave of Imports Shows More Tariff Front Running
The advance import-export data for February is another doozie. Three charts.
The next release of GDPNow may show another big drop.
I am unsure if the advance report has enough detail for a correct adjustment. His email to me says no. So the next report may be suspect (too low).
By the way, the number to watch is Real Final Sales. The difference between RFS and the base forecast is an inventory adjustment that net to zero over time.
Related Post
March 27, 2025: Auto Tariffs Disrupt Industry, Higher prices and Job Losses Loom
For those keeping score, Tesla is a “relative” US winner, but not elsewhere.
March 25, 2025: Consumer Confidence Drops 4th Month, Expectations at 12-Year Low
Confidence is at a level that tends to signal recessions says the Conference Board.
One thing can be said is that Uncle Elon’s pivot to government service has paid for itself. Tesla is mostly shielded from the auto tariffs, at least for domestic production, and Trump continues with tariffs that will essentially block imports of Chinese cars including their very robust EV sector. BYD has over taken Tesla as far as global sales. So let’s add this up: less choice, higher costs, slower growth in domestic EV sales.
BTW, Trump is looking to establish massive fees on Chinese built ships calling American ports. This has not gotten a lot of attention but it is a massive story. Pay attention. Common denominator: higher costs for Americans. The financial markets seem to be on to this.
My non-excellent comments are not good enough for Mish commentators.
For the doom and gloom personal income M/M is up 0.8%
For all the doom and gloom, still nothing going on in currencies. Range bound for weeks with no move into safe haven USD.
Euro weakening because Europe is weak. Some move into GBP as some money exits USD as Trump Tariff threat means less to recycle back into dollar.
BOE having same rate as USD there is no rate differential to drive capital flows. Result, GBP/USD is a good take on trade issues.
Europe already appears to want to discuss trade with US as they are in no position to stonewall.
Trade war talk still remains all hat no cattle as to impact. Some front running but clearly not sustainable.
add; Once Europe folds Canada will be quick to follow to negotiating table.
Apparently have to spell things out.
IBM US cuts may run deeper than feared ‒ and the jobs are heading to IndiaBig Blue ‘might as well move its headquarters’ to Bengaluru since it ‘no longer prioritizes’ Americahttps://www.theregister.com/2025/03/27/ibm_cuts_jobs_in_us/
GDPNow preempted the PCE. Import is down. Inventory change is up and consumption, ex food and energy, is up. JD Vance took over Greenland, angered Michael Waltz and the Europeans. Chainsaw Ilan cut tens of thousands and Trump raised tariffs. This madness sent the Dow up and down. It might reach a new all time high, before descending in Q3/Q4 for hard landing, for a spring, for a jump. Hakeem the regime change: Josh Shapiro will takedown JD Vance if JP will not cut rates and reap what Trump sowed in his first 60 days
Biden financed centrifugal force and protests in Israel before Oct 7 2023 in order to oust Bibi, Bibi got his Casus Beli, sent the protestors to the front line to beat Hamas, Hezbollah and Iran. In March Bibi purge his generals and changed the Israeli constitution.
Jim Jordan checks the legality of Biden’s interventions.
Bibi is smarter than Biden. He outsmart Obama. He isn’t a dictator as Erdogan who jailed his opposition leaders and over 1,000 protestors.
Having gold imports of roughly 2,000 tons causing an adjustment to GDP (-2%) is a stunning development to me. Since when has the gold market had a noteworthy impact on our GDP/economy?
I have enjoyed strong returns from investments in high quality mining stocks. Yet by some estimates the miners are lagging the market on a historical basis. In the past miners have had a 3x movement relative to the metal. My (possibly flawed) math shows the mining index GDX up 1.8x depending on what start point one starts from.
Rumor also has it that the CME has withdrawn from the Hong Kong market?
Mish, You have often shared well reasoned perspectives on the gold market. Could you share your thoughts on the overall gold market with a focus on how the tariffs will affect it?
The recession road mapAre we there yet? Not exactly.https://www.optimisticallie.com/p/the-recession-road-map
This is all going real well.
DjT
NOT!
When I press the thumbs…as I have in the past…they don’t work. Thought you blocked me. Could happen…🤪
since there are no votes I am putting voting back and make a comment to WordPress.
No one knows how to vote now. What are we to do? Clearly I am logged in.
You do not see up-down thumbs?
try again voting now
Hi
I think we are all in a wait and see situation. I expect this is the power play. Let everyone get nervous and see how they respond.
No doubt, the ECONomists will find a way to “seasonably adjust” the numbers to a positive number.
Higgins is straight up
I believe the BLS is too, after many conversations with them.
The methodology however, is a problem.
Reports are garbage.
I worked there and Misch is basically correct. However, the chain of review isn’t always honest about reports. It’s a heavily bureaucratic organization full of people with agendas. IMHO the work could be done privately with more accuracy and less expense.
Put me down for 1.4 Mish for Q1
That may not be a bad guess but I will go with -1.4
I suspect Higgins is over-adjusting but there is a decent chance it’s the other way.
The next retail sales report will be key, and some big numbers tomorrow. Since you guessed early so will I.
Tomorrow more likely than not to be poor. But guessing how GDPNow responds is always problematic.
Bold call. I can see negative Q3 but not Q2
So where is the ten year by, say, mid-October?
I already answered. Don’t know.