Tariff front-running created the biggest gap ever between domestic and all sales.
The baseline GDPNow Nowcast is 2.6 percent up slightly following Thursday’s nonfarm payroll jobs report.
The difference between the nowcast and real final sales is Change in Private Inventories (CIPI) that nets to zero over time.
Real Final Sales vs Real Final Private Domestic Sales
- The GDPNow nowcast for real final sales is 4.8 percent.
- The Nowcast for real final domestic sales is 1.2 percent.
- The Nowcast for real final domestic sales is 1.0 percent.
Percentage Point Current Contribution to GDP Estimates
- Personal Consumption Expenditures: 1.08
- PCE Goods: 0.60
- PCE Services: 0.48
- Gross Private Domestic Investment: -2.32
- Nonresidential: 0.09
- Residential : -0.27
- Government: 0.40
- Federal: 0.14
- State and Local: 0.27
- Imports: 3.82
- Exports: -0.37
Are Imports Adding to GDP?
No, imports have no impact on GDP by definition. Imports are not domestic.
However, the BEA subtracts imports to account for products sold that were not not domestic.
For example, if you buy a made-in-China lawnmower from Home Depot, that sale gets totaled up as a domestic sale. Accounting necessitates subtracting imports to remove a sale that never should have been added.
Using this methodology, imports currently add 3.82 percentage points to the nowcast because imports collapsed following a front-running surge in the first quarter.
Gross Private Domestic Investment
The percentage point contribution for GDPI is -2.32.
If you total residential and nonresidential, you arrive at -0.18.
The difference turns up in CIPI which the Nowcast at -2.13.
2025 Q1 Annualized Comparison
- Real GDP: -0.5 percent
- Real Final Sales: -0.8 percent
- Real Final Domestic Sales: 1.5 percent
- Real Final Private Domestic Sales: 1.9 percent
In the first quarter GDPI contributed 3.90 percentage points of which CIPI was 2.59 PP.
So CIPI will swing from 2.59 to -2.13 assuming no revisions (but I would not make that assumption).
Impact of Tariffs
The impact of on-off tariffs and tariff front-running is causing all of these distortions.
The BEA’s GDP Revisions to first-quarter GDP made for a record gap between real final sales and real final domestic sales in the GDPNow nowcast.
I am sure we are not done with revisions and wild swings. GDP is very difficult to estimate in these conditions.
I think the Nowcast is on the high side for the baseline number of 2.6 percent.
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June 17, 2025: Retail Sales Down Much More than Expected, Drop 0.9 Percent
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Mish, I am having trouble understanding this juxtaposition. TYPO?
“With four parameters I can fit an elephant, and with five I can make him wiggle his trunk
John von Neumann
Off Topic: How Much Does this Cost TX Hospitals / Taxpayers?
According to KXAN-TV, from Nov ’24 – Feb ‘ 25, 108,581 patients receiving medical assistance in TX admitted to being illegal aliens, or about 2.3 percent of all patients. However, the law does not require patients to answer the question, and 12.9%, or 617,000 patients, refused to answer.
Grand total 725,581 or 181,395 per month
And that’s just in TX. Somebody extrapolate that to CA & the rest of the country then put a cost to it. YIKES!
And the Senate Parliamentarian didn’t have the stones to let Congress remove 1.4M illegals from Medicaid.
That’s how bad things are out there right now. The medical industry is just full of helicopter money, pushing costs & insurance rates higher, & higher & higher to the moon.
Although it’s clearly a serious problem that all tax payers are on the hook for I highly doubt that all 617,000 who refused to answer are illegals.
Agreed, but I bet it’s a lot closer to 100% than 0%.
And I bet you are one of those who refuse to answer..
Born in Atlanta, GA – March 1967
Yes, I would refuse to answer, but not because I am an illegal immigrant.
Look at your hand is there 5 fingers !
Please keep making your debate opponent’s point for him
in your example of purchase on product from China at home depot where does the service or distribution margin go? Is that not a domestic revenue item
By subtracting the value of imports (assuming done correctly) all the rest fits into the correct buckets.
There is no “Fool in the Shower”. Without a contraction in the money stock, there will be no recession this year. Contrary to economic theory, & Nobel laureate, Dr. Milton Friedman and Anna J. Swartz (“Money and Business Cycles”), monetary lags are not “long & variable” (A Monetary History of the United States, 1867–1960, published in 1963).
The 10mo rate-of-change in short-term money flows, the volume and velocity of money, the proxy for real output in American Yale Professor Irving Fisher’s truistic “equation of exchange” is still positive.
But it does decelerate markedly in the 4th qtr.