GDP grows beyond earlier estimates

Atlanta Fed Nearly Doubles Q4 Growth Estimate to 5.4 Percent After Strong Data

Stronger economic data and delayed releases point to more robust U.S. growth momentum toward the end of the year

U.S. economic growth prospects received a fresh boost this week as the Atlanta Federal Reserve nearly doubled its estimate for fourth-quarter output after a raft of strong data, while Fitch Ratings lifted its projections for full-year 2025 and 2026 growth after delayed government releases showed firmer economic momentum.

The Atlanta Fed’s closely watched GDPNow model lifted its estimate of fourth-quarter real gross domestic product (GDP) growth to 5.4 percent on Jan. 8, up from 2.9 percent a day earlier, after incorporating new data on trade, consumer spending, and services activity.

Separately, Fitch said on Jan. 8 that delayed economic releases revealed firmer momentum in the second half of 2025 than previously assumed, prompting upward revisions to its medium-term growth forecasts.

Geiger Capital described the Atlanta Fed’s upgrade as a “massive expansion” largely attributable to the narrowing trade deficit, with new data released on Jan. 8 by the U.S. Bureau of Economic Analysis (BEA) showing that America’s trade gap shrank to its lowest level in 16 years.

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The Atlanta Fed's GDPNow model offers good short-term accuracy, generally improving as the quarter progresses, with historically low errors pre-pandemic (around 0.5 ppt absolute error) and slightly higher post-pandemic (closer to 0.77 ppt average error)