The Atlanta Fed’s GDPNow model predicts 2.6% growth for the US economy in the second quarter of 2025. This estimate remains unchanged from the previous assessment made on July 3.
Recent reports indicate a decrease in the nowcast for second-quarter real residential fixed investment growth, adjusting from -6.4% to -6.5%. Additionally, the contribution of inventory investment to annualised GDP growth has lowered slightly from -2.13 to -2.15 percentage points.
Gdpnow Model Update
The next update for the GDPNow model is scheduled for Thursday, July 17.
What this means, very plainly, is that expectations for the US economy are holding steady, despite a few minor downward adjustments in specific areas. The broad growth figure—2.6% for the quarter—hasn’t moved, which tells us that, overall, there’s confidence that economic output will keep expanding at a stable pace for the time being. That’s rooted in how the components within GDP, such as housing investment and inventory changes, are being assessed.
Residential fixed investment, for example, has been pulled down a notch—from already weak negative territory to slightly weaker. It’s not a dramatic drop, but it reflects waning momentum in sectors tied closely to construction and housing. The reality of higher borrowing costs or limited demand may be making developers more hesitant, or projects are taking longer to start. Slight as that 0.1% change may be, it’s another brick in the narrative pointing to softness in physical asset-heavy segments.
Inventory investment is also dragging slightly more than last thought. Again, it’s not enormous—just a further sliver off GDP’s bottom line—but it tells us that businesses may be scaling back how much product they’re producing without immediate buyers. This often happens when firms expect a bit less demand ahead or are watching margins more closely due to rising input costs.
Economic Signals and Strategy
In the short term, this doesn’t scream trouble, but we do take it seriously. For those of us behind screens gauging momentum and variance, these updates matter more than their tenth-of-a-point size would suggest. The composition of growth is often as telling as the headline rate, and here we can see that the surface-level calm masks a few quietly shifting vignettes underneath.
With the next official revision expected on 17 July, we have a window to prepare—not just for new numbers, but for what they may imply about broader sentiment and sector-specific developments. If the Fed remains data-focused, cracks in housing or thinner inventory levels won’t go unnoticed. How we interpret the slope of recent data, and whether there’s a discernible pattern forming, will help shape shorter-term strategies.
For example, watching for moves in rate expectations or commodity flows tied to manufacturing inputs might provide hints before traditional reports catch up. This isn’t a time to expect the same rhythm week to week—the tempo may be slowing by a fraction, but it still matters.
We should be watching the tone of upcoming corporate earnings, especially from companies exposed to residential construction or industrial production. Subtle commentary on cost management or future inventory levels can provide as much guidance as hard data. Sometimes it’s what’s not said that sharpens the picture.
So, ahead of the next GDPNow release, there is a narrow but useful window to reset models, update volatility assumptions, and reconsider hedging levels. The macro signal is modest and unchanged, which can lull the inattentive into overconfidence. But buried inside the headline are slow but precise changes—ones we can use.
