Atlanta Fed Maintains 5.4% Q4 GDP Estimate

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The Atlanta Fed's GDPNow model, a closely watched economic indicator, has maintained its estimate of 5.4% real GDP growth for the fourth quarter of 2025. This stability comes despite a recent durable goods report showing a 5.3% increase in new orders for manufactured goods, a positive sign for the economy. However, the market's reaction to this data is nuanced, as the overall GDPNow estimate remains unchanged, suggesting a cautious outlook.

Why it matters

The GDPNow estimate is a closely followed indicator of the US economy's health, and its stability despite mixed economic signals raises questions about the sustainability of current trends. The ongoing impact of the government shutdown and the lingering effects of the trade war are complicating the economic picture, leading market analysts to focus on employment and consumer spending as more reliable indicators.

The details

The durable goods report showed a strong performance in transport orders and non-defense capital goods, but the overall GDPNow estimate remained unchanged. This is partly due to the challenge of accurately tracking inventory levels during the government shutdown, which can significantly influence GDP figures. Additionally, the composition of hiring, particularly in the healthcare sector, raises questions about the sustainability of current economic trends, while the diverging spending habits of different income groups, with wealthy consumers spending robustly while lower-income households struggle, contribute to the market's skepticism about the 5.4% GDP growth projection.

• The Atlanta Fed's GDPNow model maintained its 5.4% real GDP growth estimate for the fourth quarter of 2025.
• The durable goods report showed a 5.3% increase in new orders for manufactured goods in November 2025.