Yesterday, between 10:00 AM and 3:30 PM ET, the S&P 500 erased a whopping $1.5 trillion in market cap. As usual, it’s probably not due to just one indicator or piece of news, but perhaps yesterday, one indicator, the GDPNow, from the Federal Reserve of Atlanta had something to do with it. How does it work? The Atlanta Fed’s GDPNow model is a real-time estimate of U.S. GDP growth for the current quarter. It is designed to mimic the structure of the Bureau of Economic Analysis (BEA) GDP report and updates continuously as new economic data is released. The latest reading was published yesterday and showed a contraction of 2.8% for the 1Q25 GDP (with data as of yesterday). It is considered volatile as it is an unfiletered, non adjusted, raw version of the official GDP, but it reveals problems with economic variables as they are published. We could see some improvement from here to the end of the quarter, but when the reading shows a contraction of this magnitude, it is a warning sign that should be considered. Incidentally, the tariffs talk and its formalization does not help improving the economic picture.
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