Last month, the Atlanta Fed GDPNow tracker was as high as 5.41% and that caused the usual pundits in Washington to declare that growth was running that hot. In fact, it was goosed due to a one-off super-strong October trade balance report. That was followed by a sharp correction lower in November trade and a dip down to 4.2%.
The correlate to a strong trade balance is usually a drawdown in inventories as well and we've been seeing that, something that will also be a drag on GDP.
Today's retail sales data was a soft reading that also included downward revisions. Now the GDPNow Q4 tracker is at 3.7% following. From the Atlanta Fed:
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2025 is 3.7 percent on February 10, down from 4.2 percent on February 2. After recent releases from the US Census Bureau, the US Bureau of Economic Analysis, the US Bureau of Labor Statistics, and the Institute for Supply Management, the nowcasts of fourth-quarter real personal consumption expenditures growth and fourth-quarter real gross private domestic investment growth decreased from 3.1 percent and 7.1 percent, respectively, to 2.4 percent and 6.7 percent.
The next update isn't until next Wednesday.
