November 3, 2025

QuickTakes

GDP IS HOT

The Atlanta Fed's GDPNow model estimate for real GDP growth in Q3-2025 is 4.0% (saar) today, up from 3.9% on October 27 (chart). After this morning's Manufacturing ISM Report on Business from the Institute for Supply Management, the nowcast of Q3 real gross private domestic investment growth increased from 4.4% to 4.6%. Of course, the model is based solely on data compiled by private-sector sources because the federal government shutdown has cut off the supply of government-reported data since early October.

Before the shutdown, the Bureau of Economic Analysis revised the growth rate in Q2's real GDP up to 3.8%. Also before the shutdown, the Bureau of Labor Statistics revised payroll employment down significantly, with the result that it rose just 29,000 per month on average during the three months through August. Together, this suggests that whenever the government reports productivity, its growth rates for Q2 and Q3 should be very strong.

Today's M-PMI report was relatively weak, with the overall index below 50.0 for the 8th straight month, at 48.7 (chart). All the major subindexes of the M-PMI were below 50.0.

However, the M-PMI has been a poor indicator of real GDP growth over the past three years (chart). The latter has been growing faster than the M-PMI suggests.

The M-PMI has even been useless as an indicator of the growth rate in real GDP of goods over recent years (chart). It had been more useful in the past.

The good news in the latest M-PMI report is that inflationary pressures, which rose earlier this year as a result of tariffs, may be abating already (chart).

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