The Atlanta Fed’s GDPNow model just delivered the kind of plot twist that makes economists spill their coffee. The real-time GDP tracker for the second quarter dropped to 1.2% as of July 1, down from 2.5% barely a week earlier on June 25.
To put that in perspective: this same model was projecting 4.3% growth in mid-May. In roughly six weeks, the US economy went from looking like it was sprinting to barely jogging. That’s a 3.1 percentage point collapse in the nowcast.
What drove the drop
The primary culprit was the June 26 Advance Economic Indicators report. That release triggered significant negative adjustments in two critical areas: net exports and private inventory levels.
The trajectory this quarter has been unusually volatile. The model opened at 3.7% on April 30, climbed to its peak of 4.3% around mid-May, and has been sliding ever since. The latest reading of 1.2% represents the lowest point of the quarter so far.
