The US trade deficit contracted sharply in October…The trade gap narrowed 39% to $29.4 billion…Economists polled by Reuters had forecast the trade deficit rising to $58.9 billion…
Imports decreased 3.2% to $331 billion…Exports rose 2.6% to a record $302 billion in October…Trade contributed to GDP growth in the second and third quarters of 2025.
DB2
Quite the sugar rush. I’ll stick with the standard economic models for longer term effects.
“The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2025 is 5.4 percent on January 8, up from 2.7 percent on January 5. … the nowcast of the contribution of net exports to fourth-quarter real GDP growth increased from -0.30 percentage points to 1.97 percentage points.”
U.S. Real GDP growth is slowing long-term:
from to CAGR 1/1/1948 1/1/1974 3.9% 1/1/1974 1/1/2008 3.0% 1/1/2008 1/1/2025 2.0%
data from Real Gross Domestic Product | FRED | St. Louis Fed
This was not a problem for the U.S. stock market, as U.S. companies expanded markets overseas. Data from Shiller CAPE S&P 500 data:
real TR P real TR E from to CAGR CAGR 1/1/1948 1/1/1974 9.0% 7.9% 1/1/1974 1/1/2008 6.7% 4.8% 1/1/2008 1/1/2025 8.5% 6.8%
Indeed. These October numbers are more of the same after the 3rd quarter GDP report, where imports were down 5% and exports up 9%.
DB2
Or rather…a gold rush!
"Gold Exports Surge on Rising Prices
Exports of non-monetary gold and other precious metals surged by more than $10 billion in October, offsetting declines elsewhere and accounting for more than the total $7.1 billion rise in exports that month. The spike came as gold hit a then-record high on Oct. 20, part of a recent trend of investors piling into the safe-haven asset."
Most of the nonmonetary gold exports will not count toward GDP. That’s one thing about wanting GDP data Now - it’s not always accurate.
Good golly, we’re exporting lots of nonmonetary gold! This chart doesn’t even factor in the increase during Q3, nor the dramatic October 2025 increase.
What is “non-monetary gold”? For that matter, what is monetary gold?
DB2
Nonmonetary gold is all of the gold not held as reserve by monetary authorities.
Monetary authorities are typically central banks.
Monetary gold is the gold held as a reserve asset by central banks, or others subject to their control.
Is your Googler broken?
On the flip side, check this out - nonmonetary gold imports -
Remember when GDP went negative in Q1?
Sorry to blow up your post…I thought I should explain.
It appears that the nonmonetary gold imports and exports have been blowing up the trade data and GDP model. The challenge is - gold bars have been included in the “finished metal shapes” category, and therefore have been included in the “industrial supplies and materials” category of the Census data. The American Enterprise Institute (AEI) report doesn’t separate gold bars out either. The BEA doesn’t seem to have an effective way to solve this problem.
“Yada, yada, yada”
Because gold bars should be considered as investment, and not necessarily exports / imports - the drastic swings in imports and exports of gold bars are seriously impacting trade data and GDP.
So why doesn’t it count as an export or import? Somebody is paying millions/billions for the bars. If I spent $200 million for several works by Matisse or Picasso and had them shipped to the US from Europe, would that count as an import into the US?
DB2
Because it’s considered a transfer of wealth / asset. Nonmonetary gold is treated the same as stocks / bonds…it’s not included in GDP.
I dunno, but given the same logic, fine art imports / exports shouldn’t count toward GDP.
The nonmonetary gold issue wasn’t a concern until early 2025. The historical import / export averages did not impact GDP that much up to that point…it was flying under the radar.
If, for some weird reason, fine art imports and exports happen to be included in GDP calculations, that problem won’t arise until we’re seeing 10s of billions of dollars in fluctuations from historical averages.
The core to the answer is that GDP is meant to measure production of good/service that has economic value.
Each step in a transaction has some (perhaps very small) amount of value-add and GDP is meant to measure that economic value-add.
How that gets measured in practice for a good that is just aging, like art, or gold, I do not know.
As something valuable ages, there are maintenance, storage, security and insurance costs, so there is that piece of the economics, fwiw.
OK, but there’s something missing. If I am at a gallery in Taos and buy a beautiful vase for my wife, the state collects sales tax and the gallery pays the artist in addition to making a profit. Both sales (to the gallery and then to me) contribute to the US GDP.
Last year I bought a Hundertwasser from a gallery in Paris. It was shipped to Wisconsin and was accompanied by its import paperwork – including an import duty.
And then there’s the large contribution to US GDP (about 3%) by Hollywood and its films. A large portion of the monies come from overseas markets.
So we know that in the real world art contributes to the GDP and is taxed, including import duties.
DB2
I agree with you for the most part, the challenge is parsing it out to include the things that impact economic growth and exclude the things that don’t.
I’m not sure that is a distinction made when calculating GDP (or how it would be done). Even the manufacture and sale of, say, cigarettes contributes to GDP. In addition, the money keeps getting spent – the clerk in the store that sells the cigs gets paid and using the money to buy groceries, etc.
The weird thing about gold definitions in GDP calculations is that gold exports count in the numbers but gold imports don’t. Seems pretty arbitrary.
DB2
When the gallery buys the vase it pays the artist for the economic value added by the artist (the creation of the vase).
That vase goes into business inventory and contributes to gdp (uptick in inventory).
Then when a consumer buys the vase from the gallery, there is a markup (cost of goods sold, for example). That markup is the economic value-add of the gallery. That value-add goes into gdp as retail sales.
Yes.
The question is, for fine art that continues to appreciate in value beyond the initial sale, how is that measured?
Seems you would want to measure the appreciation in real dollar terms that is realized each time the art changes hands, I guess.
I think the point economists are making is that gold exports do count toward gdp, but they are not an indicator of increased production of goods like cars, electronics, etc. As a result, the large increase in gold exports are likely indicative of a flight to safety from a declining dollar. Therefore focusing solely on the export total could mislead a person into thinking it is indicative of a booming economy without accounting for this underlying issue. But I am not an economist so you need to look it up yourself.
It’s not. The most often-used formula for calculating GDP is:
GDP = C + I + G + (X-M), summing household Spending (C), business Investment (I), Government spending (G), and Net Exports (X-M, or Exports minus Imports).
The assumption is that everything that you produce in a year ends up in one of those buckets: household spending, business investment, or government spending. Imports are always a net negative to GDP to avoid double counting - they’re part of consumption but they’re not produced in the country. Exports are added back, since they’re things that are produced in the country but don’t end up in one of the three domestic buckets.
By the market value through other sales and appraisals. And certainly when art work is imported or exported there is a value attached to it (which goes to calculating the duties collected by one side or the other).
It seems only gold has this ignore one side calculation.
DB2
I don’t think that’s right.
It has been decades since my economics classes, but my dim befuddled recollection of Ec10 is that all purchases of existing assets are backed out of GDP. And a few quick google searches support that. If you buy an existing house, or a Picasso, or an antique sports car, that transaction will not be included in GDP calculations. If you import or export a Picasso or antique sports car, it also will not be counted towards GDP (for either country) - any more than transfers of those assets domestically would be counted towards GDP for either country. They will show up as affecting the balance of trade (net imports), but not as GDP.
I don’t understand what you mean. Nonmonetary gold imports and exports are both excluded from official GDP calculations. It’s not arbitrary. Both are treated as financial investments coming into and out of the country.
Yaaaasssss!
GDP does not measure wealth. It measures (or attempts to measure) Production of wealth. Very similar, yet different.
If I build a house, that is in GDP. I have produced something which is worth something. If I sell the house, I haven’t added any “production of wealth”, I have merely traded the asset for a different asset. If I was to measure it when sold I would be double-counting it, because I already counted it when I built it.
Now there’s a little bit of a pony there: the real estate commission is ‘production” and any fix-ups I do are probably “production” and if I hire somebody to stand in the front yard with a sign that says “Open House Sunday 2-5” that counts too. But the house itself? Nope.
To positively murder the already dead horse, if I add a bedroom, that’s GDP because I have “produced” something new. When I sell the house with the added bedroom, doesn’t count insofar as GDP/GNP goes..
Likewise, importing (or exporting) a fine art piece isn’t “GDP” because I haven’t produced anything, I’ve just traded something for something. (Ignoring auction house fees, carpenters boxing it up, etc.) Likewise precious metals, jewelry, etc. (The original production of making the fine art piece? Yep. GDP.)
It’s Gross National PRODUCT(ion). See? If we spend on oil cleanup or education, that counts because we’re ‘producing” a service. Military too. If we trade assets (money for gold, etc) that doesn’t count because we haven’t created anything, we’ve just shape shifted.
GDP misses a lot. Unpaid work (housewives), volunteer work, public services like parks & playgrounds which do not charge admission, and so on. GDP measures flow into production. That which doesn’t 1) flow and 2) produce don’t count
In the short time I was an economics major (around ‘66) it was all about GNP. Then it became GDP. Pretty much the same car, different color.
