Atlanta Fed GDPNow Trims Q3 US Growth Outlook to 3.7%

• Third-quarter 2026 real GDP growth now seen at a 3.7% annualized pace, versus 5.0% on September 25.
• Real consumer spending growth estimate trimmed to 3.5% from 4.2%.
• Real gross private domestic investment growth estimate raised to 20.7% from 18.7%.
• Net exports contribution now at −2.60 percentage points, compared with −1.37 percentage points before.
• Next GDPNow update is scheduled for Thursday, October 1.www.atlantafed.org

August goods trade data released today offer some insight into the downward revision:

• Advance goods trade balance came in at −$132.6 billion versus an expected −$115.0 billion.
• July's goods trade balance was −$118.9 billion.
• The deficit grew by $13.7 billion from July and was $17.6 billion wider than forecast.investinglive.com

Following this morning's releases from the Census Bureau and the Bureau of Economic Analysis, the Atlanta Fed trimmed its GDPNow projection for third-quarter US growth to 3.7% from 5.0%. Growth is still seen as healthy, but the reduction cools some of the optimism in the outlook.

The US posted an August goods deficit of $132.6 billion, far above the $115.0 billion forecast and the $118.9 billion recorded in July. That weaker trade performance helps account for GDPNow's revised expectation that net exports will shave 2.60 percentage points off third-quarter growth, up from a 1.37-point drag previously. A softer projected path for consumer spending contributed to the downgrade, though a stronger investment outlook partially offset the impact.investinglive.com

Quick analysis: The headline number is softer, but the breakdown is instructive. A larger trade deficit drags on the GDP calculation without necessarily pointing to a broad weakening of domestic demand. The downgrade to consumer spending is the more direct signal of softer demand, while investment remains a counterweight. This update may ease pressure on Treasury yields and the dollar and reduce expectations for additional Fed tightening, though inflation and employment figures will still be pivotal for that decision.

What this report measures: GDPNow estimates inflation-adjusted gross domestic product by incorporating incoming economic data ahead of the government's quarterly GDP release. Its seasonally adjusted annualized rate shows growth as if the quarter's pace were sustained for a full year. Imports are subtracted in the GDP calculation to exclude foreign production already reflected in spending or investment; GDPNow is a changing model estimate rather than an official Atlanta Fed forecast.