Gold Imports Tarnish GDPNow

If you like following economic data like we do, you are probably familiar with all the ways they are adjusted. Many are inflation-adjusted, removing skew from price changes. Many are seasonally adjusted, smoothing out normal spikes and dips that happen at set times each year (e.g., back-to-school and holiday shopping pumping retail sales data). And, now, it seems we have another: The Atlanta Fed rolled out a “gold-adjusted” version of its GDPNow, which addresses the issue our coverage highlighted last week: the tendency for non-monetary gold imports to skew its real-time economic tracker.

When we covered GDPNow’s flip to contraction for Q1, we noted the dip stemmed primarily from spiking imports. This was partly from businesses’ front-running tariffs, but also partly from a rush of physical gold imports. You see, gold prices in New York were higher than in London, so people with the means to do so were pulling their gold bars out of the Bank of England’s or Swiss vaults (which are kind of a Public Storage locker only for your gold rather than your holiday decorations and spare furniture), flying them across the Atlantic and selling them in New York to capture the spread.

GDP doesn’t include imports and exports of non-monetary gold. No reason to—they have nothing to do with actual economic output. But the first release of monthly trade data does include them and doesn’t have the detailed categorical breakdowns necessary to strip them out. So when GDPNow flipped to contraction on spiking imports, everyone put two and two together, remembering the funny human interest stories about bigwigs chartering jets to fly their gold across an ocean, and figured gold must be skewing everything higher.

Thanks to the more detailed second trade release, we now have some data to back up that assumption. Exhibit 1 shows imports with and without physical gold, which includes the very clear line item “non-monetary gold” and the nebulous “finished metal shapes,” which Reuters, Bloomberg and others say is probably all gold or close to it. Normally, imports with and without gold track pretty closely. Not so in January.

Exhibit 1: Imports, With and Without Gold Bars

Source: FactSet and US Census Bureau, as of 3/12/2025.

Helpfully, the Atlanta Fed crunched this into their GDPNow model, as Policy Adviser and Economist Patrick Higgins shared in a recent LinkedIn post. He showed the latest estimates, which include a fun line item called “Gold Adjusted.” On March 6, the date the detailed trade data came out, the headline GDPNow reading was a -2.4% annualized decline, while the gold-adjusted reading was just -0.4%. The very next day, when the jobs report beat the Atlanta Fed’s expectations, the gold-adjusted GDPNow improved to 0.4% annualized growth. The headline reading still showed contraction, albeit a milder one at -1.6% annualized. But stripping out all those high-flyers with their chartered planes full of gold bars, the gauge estimates we will have Q1 growth.^[i]

All our other caveats about GDPNow still apply. It still tends to be far off early in the quarter, then narrow toward the actual result as more data feed into it. It is still just a tracker and aggregate of incoming data, not a forecast. And it is still widely known, not a surprise for stocks. Gold’s effect on it is pretty widely known, too. We aren’t saying there is some big bullish power here. But it does put today’s recession fears in context, showing they are based more on talk than concrete information. The fact so many headlines seized on it tells you a little something about sentiment. False fears are generally quite bullish over the medium and longer term even as they can smack sentiment hard in the moment. Recession fear is weighing on markets now, but the likelihood stocks will have an actual recession to price still looks low.