Trade Data Smacks GDPNow First Quarter Forecast Down to 1.1 Percent

I have been calling for this. But the big hit is still ahead.

GDPNow Current Numbers

• Headline GDP Nowcast: 1.6 percent
• Real Final Sales: 1.1 percent
• Real Final Private 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.

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 a bit.

Trade Data

This is what I said yesterday and before.

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.

The Commerce Department posted trade data for February on April second.

This is how GDPNow reacted.

GDPnow 2026 Q1 Net Exports

The GDPnow net exports contribution fell from -0.23 percentage points to -0.76 percentage points.

Curiously, the February trade data was not that bad.

February Net Trade Data

• Prior: $-54.5 Billion
• Prior Revised: $-54.7 Billion
• Actual: $ -57.3 Billion

A small deterioration of about 2.8 billion is along the lines of what I expected.

For GDPnow to take off over a half point from net exports (0.3 percentage points overall) on that small of a change means the GDPnow model did not expect this deterioration at all.

If I am correct, trade data will be sharply negative for March. But we don’t know what the model will now expect.

We won’t find out either. The next full trade data will not be out until after GDP for Q1 is released.

The next GDP report is due April 30. The next full trade report is May 5. However, we will have an advance trade report on April 29.

That’s likely to give us an indication of the direction of GDP in relation to GDPNow (assuming the model is again not prepared for bad trade data).

If the trade data is bad, as I expect, the model rates to be on the high side vs what it would have been if we had the May 5 report.

Inflation Data

I expect inflation data to be on the hot side and perhaps very hot.

The combination of bad trade data and hot inflation numbers (CPI and PCE) could send GDP negative for the quarter.

The March CPI report will be out on April 10. However, the March PCE report will not be until April 30 (the day of the GDP report).

I am now leaning towards a very weak if not negative first-quarter GDP.

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