Atlanta Fed’s GDPNow Trims Q3 2025 Growth Track to 4.0% as Consumption, Investment Cool
The Atlanta Fed’s GDPNow model shaved its estimate for US real GDP growth in Q3 2025 to 4.0% annualized from 4.2%, reflecting softer high-frequency reads on household spending and private investment. The revision keeps growth well above long-run potential but hints at easing momentum into year-end.
Consumption and Investment Nowcasts Edge Lower The latest update followed releases from the US Census Bureau, Bureau of Labor Statistics, and the Federal Reserve Board of Governors. The model’s nowcast for real personal consumption expenditures eased to 3.2% from 3.4%, while real gross private domestic investment slowed to 4.4% from 4.9%.
A 4.0% print, if realized, would still mark robust activity on a seasonally adjusted annualized basis, underpinned by resilient consumer outlays and a still-solid capex backdrop. However, the incremental downtick suggests cooling demand and tighter financial conditions may be exerting a marginal drag on late-quarter momentum.
Policy and Market Implications Growth running materially above the economy’s estimated potential (roughly 1.8%–2.0%) complicates the monetary-policy outlook. While inflation progress has been the primary driver of rate expectations, sustained above-trend activity can curb the urgency for policy easing and may steady front-end yields. For FX markets, a 4-handle on growth tends to be dollar-supportive at the margin through relative growth and yield dynamics, though follow-through will hinge on subsequent inflation prints and labor data.
With markets highly sensitive to incremental shifts in the growth-inflation mix, traders will watch how incoming data feed the model’s next iterations—particularly updates on retail sales revisions, durable goods, inventories, and trade, which can meaningfully move the GDPNow track.
What’s Next The Atlanta Fed said the next GDPNow update is due Wednesday, November 26. As always, the tracker is a real-time model of the BEA’s methodology and can be volatile; it is not an official forecast but a guide to the evolving data flow.
Market Highlights – GDPNow Q3 2025 growth estimate lowered to 4.0% saar from 4.2% – Real PCE nowcast eased to 3.2% (from 3.4%) – Real private domestic investment moderated to 4.4% (from 4.9%) – Growth remains above potential, tempering aggressive easing bets – Next model update scheduled for Wednesday, November 26
Questions and Answers Q: What is GDPNow? A: GDPNow is the Atlanta Fed’s high-frequency model that tracks real-time GDP using incoming economic data aligned with the BEA’s methodology. It’s not an official forecast but a data-driven nowcast.
Q: Does a 4.0% estimate change the Fed outlook? A: Not on its own. While strong growth can support higher-for-longer rate expectations, policymakers focus on inflation trends and labor conditions alongside activity data.
Q: Why did the estimate fall from 4.2% to 4.0%? A: Updates to source data prompted lower nowcasts for consumer spending and private investment, both key components of GDP.
Q: How often is GDPNow updated? A: Updates typically occur several times per month as new data arrive. The next release is slated for Wednesday, November 26, according to the Atlanta Fed.
This article was prepared by the BPayNews markets desk.
