The Atlanta Fed’s GDPNow model predicts that the US economy will grow by 2.6% in the second quarter of 2025. This estimate hasn’t changed since July 3. Recent reports show a slight decrease in the forecast for real residential fixed investment growth, adjusting from -6.4% to -6.5%. Additionally, the contribution of inventory investment to annual GDP growth has been slightly reduced from -2.13 to -2.15 percentage points. The next update for the GDPNow model is set for Thursday, July 17. This means that expectations for the US economy are stable, even with some minor downward adjustments in certain areas. The overall growth rate of 2.6% for the quarter has not changed, indicating confidence that the economy will continue to grow steadily for now. This is based on how different GDP components, like housing investment and inventory changes, are currently assessed. For example, residential fixed investment has dropped a bit—from negative territory to a slightly worse negative. While this isn’t a significant decline, it shows a slowing trend in sectors closely related to construction and housing. Higher borrowing costs or lower demand might be making developers more cautious, or projects could be experiencing delays. Even a small change of 0.1% adds to the narrative of weakness in sectors heavily reliant on physical assets. Inventory investment is also slightly lower than previously thought. This isn’t a large change—just a small impact on GDP—but it suggests that businesses might be reducing production without immediate buyers. This often happens when companies anticipate less demand or are being cautious due to rising costs. In the short term, this isn’t a major concern, but it’s something to monitor. For analysts watching trends, these updates are more significant than their minor changes might imply. The details of growth can be just as important as the overall rate, showing that underlying issues may be emerging. As we prepare for the official update on July 17, we should consider not just new numbers but what they might indicate about overall sentiment and sector-specific trends. If the Fed stays focused on data, issues in housing or inventory levels will be important to observe. How we interpret recent data and whether a clear pattern emerges will inform short-term strategies. For instance, keeping an eye on changes in rate expectations or commodity flows related to manufacturing can offer insights before traditional reports are released. It’s important not to expect the same pace week after week—the tempo may be slowing down slightly, and that matters. We should also pay attention to upcoming corporate earnings, particularly from firms involved in residential construction or industrial production. Subtle comments about managing costs or future inventory can provide valuable insights, sometimes even more than hard data. Often, what’s left unsaid can clarify the situation. So, before the next GDPNow release, there’s a useful opportunity to adjust models, update volatility assumptions, and reconsider hedging strategies. The overall macro signal is modest and stable, which might cause some to feel overly confident. However, beneath the surface are slow but important changes that we can leverage.

here to set up a live account on VT Markets now