The Atlanta Fed’s GDP Now Estimates 5.4 Percent Growth

Plus, Trump tells people of Iran: “Feel strongly about freedom. There’s nothing like freedom.”

The Atlanta Fed’s GDP Now estimate, which correctly called the 3rd quarter 2025 growth that came in at 4.3 percent, now has the 4th quarter 2025 real GDP number at a blistering 5.4 percent. Separately, but somewhat relatedly, the Bureau of Labor statistics released data showing that in the third quarter “Productivity, or nonfarm employee output per hour, soared at a 4.9% annualized rate,” as Bloomberg put it.

At the risk of The Editors becoming known for obsessing over an obscure outlying statistical indicator the way the late New York Post Washington bureau chief, Deborah Orin, used to talk about the Zogby Poll, the Atlanta Fed figure is worth keeping an eye on. The press has a negativity bias that emphasizes bad news, so the estimate probably won’t get much attention, and if the actual growth number does come in that strong, the newspapers will use words like “unexpectedly” and “surprise.”

Worries that the strong growth will fuel inflation are probably misplaced, as inflation is headed lower on the basis of sagging shelter and energy prices. The strong growth would bring a dramatically improved federal budget picture; ironically, just as the Atlanta Fed updated its estimate for the 4th Quarter of 2025 to 5.4 percent, the Congressional Budget Office, which estimates the cost of tax and spending legislation, issued its own revised projections with 4th quarter 2025 real GDP growth at an anemic 1.2 percent. Either the Atlanta Fed Nowcast is going to be way off or the CBO is going to be way off, because there is a lot of distance between 5.4 percent growth and 1.2 percent growth. (The New York Fed’s Staff Nowcast sits at 2.07 percent for Q4 2004 and 2.17 percent for Q1 2025.)

We wrote here December 23, 2025: “Complex systems are hard to predict, but if Bessent is correct and 2025 was setting the table and 2026 is the feast or the banquet, we would not be surprised here to see some quarterly or even annual growth numbers starting with 5 or 6, not 2, 3, or 4. People have forgotten what is possible on the upside.”

Treasury Secretary Bessent spoke to the Economic Club of Minnesota today in his first speech of 2026. In his prepared remarks he said in part, “With capital flowing, productivity surging, and prices easing, the stage is set for robust, non-inflationary growth in 2026.” He also said, “President Trump led a 12-month transformation of our economy, which delivered roughly 4% GDP growth in his first two full quarters in office and nearly 3% GDP growth in the fourth quarter, even amid a Democrat-led government shutdown. This growth is just a harbinger of what’s to come.”

This is the case even though the Trump economic policy and messaging is not 100 percent optimal. For example, yesterday Trump targeted a defense contractor, Raytheon: “if Raytheon wants further business with the United States Government, under no circumstances will they be allowed to do any additional Stock Buybacks, where they have spent Tens of Billions of Dollars, until they are able to get their act together.” Trump is proposing such a large increase in defense spending that Raytheon is going to do pretty well even without stock buybacks, but the precedent of a president dictating how a private company, even a federal contractor, can allocate capital is concerning. Trump also said:

All United State Defense Contractors, and the Defense Industry as a whole, BEWARE: While we make the best Military Equipment in the World (No other Country is even close!), Defense Contractors are currently issuing massive Dividends to their Shareholders and massive Stock Buybacks, at the expense and detriment of investing in Plants and Equipment. This situation will no longer be allowed or tolerated! Also, Executive Pay Packages in the Defense Industry are exorbitant and unjustifiable given how slowly these Companies are delivering vital Equipment to our Military, and our Allies. Salaries, Stock Options, and every other form of Compensation are far too high for these Executives. Defense Companies are not producing our Great Military Equipment rapidly enough and, once produced, not maintaining it properly or quickly. From this moment forward, these Executives must build NEW and MODERN Production Plants, both for delivering and maintaining this important Equipment, and for building the latest Models of future Military Equipment. Until they do so, no Executive should be allowed to make in excess of $5 Million Dollars which, as high as it sounds, is a mere fraction of what they are making now. Additionally, the maintenance and repair of Equipment, once sold, is far too slow, and must be immediately enhanced. As President, I am demanding that maintenance be “spot on, on time.” Therefore, I will not permit Dividends or Stock Buybacks for Defense Companies until such time as these problems are rectified — Likewise, for Salaries and Executive Compensation. MILITARY EQUIPMENT IS NOT BEING MADE FAST ENOUGH! It must be built now with the Dividends, Stock Buybacks, and Over Compensation of Executives, rather than borrowing from Financial Institutions, or getting the money from your Government. Longer term, this is good for both Executives and Shareholders, because it will be GREAT for our Country! Thank you for your attention to this matter. MAKE AMERICA GREAT AGAIN! DONALD J. TRUMP PRESIDENT OF THE UNITED STATES OF AMERICA

Trump has also been talking negatively about “the big fat cats in the insurance companies” and announced, “I am immediately taking steps to ban large institutional investors from buying more single-family homes, and I will be calling on Congress to codify it. People live in homes, not corporations.” The Committee to Unleash Prosperity described that as an “almost comical blunder” and noted, “one unintended consequence of banning institutional investment in housing is this will surely reduce the incentive to build new homes.”

With Trump targeting real estate investors, military contractors, and insurance companies and with Vice President Vance out today denouncing the “corporate media” in the style of the socialist Senator Sanders, you start to wonder what parts of the economy are safe.