Oh dear!
The Atlanta Fed just doubled its GDPNow estimate for Q4 real GDP growth from 2.7% to 5.4%!
It's beginning to look like trumpy's tariff policy is contributing to an economic boomlet at home and a dramatic shrinkage in our trade deficit vis-a-vis the rest of the world!
Both are good trends! I mean, ALL of us prefer stronger US economic growth combined with a smaller trade deficit... don't we?
Maybe tariffman knows what he's doing!
Sizzling 5.4% Growth: Atlanta Fed Doubles Q4 GDP Estimate, Signaling Unprecedented U.S. Resilience
January 08, 2026 at 17:55 PM EST
In a move that has sent shockwaves through global financial markets, the Federal Reserve Bank of Atlanta drastically revised its GDPNow tracker for the fourth quarter of 2025. On January 8, 2026, the estimate for real GDP growth was effectively doubled, jumping from a projected 2.7% to a staggering 5.4%. This revision marks
one of the most significant upward adjustments in the model's history, suggesting that the American economy is not merely avoiding a recession but is currently in the midst of a high-octane expansion that few analysts saw coming.
The immediate implications of this "sizzling" forecast are profound. With official government data currently delayed due to an ongoing federal shutdown, the Atlanta Fed’s nowcast has become the primary North Star for investors and policymakers alike. The 5.4% figure suggests that despite high interest rates and global geopolitical tensions, the
U.S. consumer remains undeterred and the domestic trade balance has shifted in a way that provides a massive tailwind to national output.
The revision occurred on the morning of January 8, 2026, following a series of data releases that painted a picture of a rapidly narrowing trade deficit and robust year-end consumer activity. Just three days prior, on January 5, the GDPNow model sat at a respectable but modest 2.7%.
The leap to 5.4% was primarily driven by a collapse in the U.S. trade deficit, which shrank by nearly 40% in the final months of 2025. This contraction in the deficit - the lowest level since 2009 - was fueled by a 2.6% rise in exports against a 3.2% drop in imports, a trend many economists attribute to the aggressive tariff policies implemented throughout the previous year.
This event fits into a broader trend of "economic nationalism" and the restructuring of global trade. The fact that the GDP estimate doubled largely due to
a massive swing in net exports - from a -0.30 percentage point drag to a +1.97 percentage point addition - highlights how sensitive the U.S. economy has become to trade policy. Historically, GDP growth is driven by consumption; seeing such a massive contribution from the trade balance is a rare occurrence that mirrors the protectionist eras of the 20th century.
The Atlanta Fed’s doubling of the Q4 GDP estimate to 5.4% is a watershed moment for the 2026 economic outlook. It confirms that the U.S. economy possesses a level of underlying strength that has defied the gravity of high interest rates and global instability.
The primary takeaways are clear: the consumer is still spending, and the narrowing trade deficit has become a powerful, if controversial, engine for growth.
https://markets.financialcontent.com...oogle_vignette
