The Atlanta Fed’s GDPNow Q1 tracker has been revised downward to -2.8% from -1.8%. In contrast, the NY Fed tracker has increased to 2.86% from 2.72%.
The NY Fed attributes the 0.2 percentage point increase for 2025:Q1 to recent data releases, while the estimate for 2025:Q2 remains mostly unchanged. The end of the quarter is approaching, with more data expected that will influence GDP assessments, although some may be affected by tariff-related adjustments.
Opposite Signals From Fed Models
Personal consumption data showed a negative surprise, but this was countered by a positive surprise in manufacturers’ new orders and parameter revisions for 2025:Q1.
What we have here is a clear divergence between two forecasting models. The Atlanta Fed, relying on real-time data to estimate GDP growth, has sharply reduced expectations for Q1, projecting economic contraction. Their revised figure of -2.8% suggests a weaker-than-anticipated start to the year. That’s a full percentage point drop from the previous forecast, which already signalled trouble. On the other side, the model from New York has moved the opposite way, nudging its estimate upward to 2.86%—an increment, yes, but one fuelled by upbeat readings in some components of recent data.
The increase, specifically for the first quarter of 2025, can be explained by stronger manufacturing orders and updates to prior assumptions. Meanwhile, expectations for the second quarter stay more or less flat. That steadiness might reflect either limited new information or that the latest economic signals weren’t convincing enough to adjust the trajectory. Importantly, consumption came in soft, which would usually pull forecasts down, but was more than offset by better-than-expected readings in factory demand and tweaks to equation settings.
Key Implications For Market Strategies
The timing of these revisions is not accidental. We’re approaching the end of the quarter, and with it comes a flurry of formal numbers and late-cycle adjustments. We must also consider that incoming trade data, filtered through the latest tariff frameworks, may skew headline figures slightly, either inflating or dampening true economic activity. As inputs continue to arrive—both from consumer spending and industrial production—a clearer shape of the quarter should emerge.
For those of us engaged in complex trading strategies, particularly in derivatives, it’s vital to recognise that forecasts rooted in high-frequency data may rapidly pivot with each economic release. The widening gap in estimates—especially when one is projecting contraction and the other healthy expansion—implies the risk environment is shifting, not steadily, but erratically. It’s not a question of who’s right just yet, but how fast markets will price in revised expectations as fresh numbers land.
Williams’ team had its expectations buoyed primarily by factory order growth. It’s not just a bounce; it had enough weight to offset a weak consumption read. That kind of reshuffling should remind us that single datasets can swing forecast balance if they come in meaningfully above trend. It matters because order books hint at future production rather than just reflecting the past month’s mood.
On our end, the mismatch between trackers tells us to be extremely selective about the inputs we’re using and how far ahead we’re projecting. The volatility across different model projections may not smooth out for several weeks, particularly with policy shifts and external trade noise still playing into quarterly trajectories. For now, models like the ones we’ve monitored here show just how sensitive forward-looking estimates are, and how subtle data moves can end up having outsized effects on calculated growth.
