The Atlanta Federal Reserve’s GDPNow model lowered its estimate of third-quarter U.S. economic growth to a 3.4% annualized rate Tuesday, from 3.5% a week earlier, as new Census Bureau data reduced its estimate of private investment growth.
The October 27 update is a small downward revision to a running estimate, not a government report of actual gross domestic product. The model’s previous estimate was published October 20.
After Tuesday morning’s Census Bureau releases, GDPNow’s estimate of third-quarter real gross private domestic investment growth fell to 19.4% from 19.9%. The Atlanta Fed identified that change in its update without describing it as a broad deterioration across every part of the economy.
A nowcast, not an official GDP reading
GDPNow estimates economic growth using incoming data before the official GDP figure is available. The Atlanta Fed says the model uses methods similar to those employed by the Bureau of Economic Analysis, which produces the government’s GDP accounts.
The distinction is important: a 3.4% nowcast is an estimate of inflation-adjusted growth at a seasonally adjusted annual rate. It is not a claim that the economy grew 3.4% from one quarter to the next, nor is it the final measure of third-quarter output.
The Atlanta Fed also says GDPNow is not an official forecast of the bank. There are no subjective adjustments to the model’s estimate. Its changes reflect the mathematical results of incoming economic data, rather than a vote or policy judgment by Federal Reserve officials.
A modest revision in a moving estimate
Tuesday’s decline follows earlier downward moves this month. The model stood at 3.6% on October 15, unchanged after rounding from October 8, before slipping to 3.5% on October 20. Those readings and Tuesday’s 3.4% estimate describe the same quarter at different stages of the data flow.
For businesses tracking demand and investment, the update offers a current model-based snapshot, with the usual uncertainty that comes before a full official accounting. It should not be read as proof of a recession, a guarantee of the eventual GDP figure or a signal that the Federal Reserve has made an interest-rate decision.
The next GDPNow update is scheduled for Wednesday, October 28, according to the Atlanta Fed. Further data can change the estimate again.
File photo: Federal Reserve Bank building in Atlanta, September 24, 2023. Thomson200 / Wikimedia Commons, CC0 public domain. Resized.
JBizNews Desk | Atlanta
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