March 03, 2025 at 05:18PM
Last week’s huge US trade deficit caused a big downgrade in Q1 growth expectations for the US but Goldman Sachs took a deeper look at the data and noted that the picture isn’t so bad.
Most analysts assumed that it was stockpiling of goods ahead of the tariffs that drop the huge jump in US imports that weighed on trade. Instead, it was gold that did much of the work.
“While we expect growth to slow this year, the latest data points are not as bad as they look. Most of the widening in the trade deficit reflects a surge in gold imports—which are excluded from GDP—driven by tariff fears. And weak consumer spending in January was likely driven by cold weather, residual seasonality, and normalization from a very strong pace in 2024H2.”
Goldman lowered its Q1 GDP estimate to +1.6%, far above the -2.8% in the Atlanta Fed tracker. They see growth this year at 2.2%, down from 2.4% though that’s surely highly subject to what comes out of Congress and the White House in the months ahead.
h/t. @mikezaccardi.
This article was written by Adam Button at www.forexlive.com.
