The Atlanta Fed has raised its estimate of fourth quarter gross domestic product (GDP) growth to 5.4%, up from 2.7%, driven by strong consumer spending and a narrowing trade deficit. This morning, the U.S. Bureau of Economic Analysis announced that the U.S. goods and services trade deficit fell by 39% month-over-month to $29.4 billion in October, marking the lowest level since 2009.
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A lower trade deficit supports GDP because selling more to other countries than is bought from them keeps more money in the economy and boosts growth.
Fitch Hikes 2025, 2026 GDP Estimates
Credit rating agency Fitch also expects higher GDP for the U.S. It raised its GDP estimate for 2026 to 2% from 1.9% and its 2025 estimate to 2.1% from 1.8%, citing stronger-than-expected economic data following the government shutdown. In its December Global Economic Outlook, Fitch also pointed to AI spending and lower rates as key drivers of economic growth.
Fitch expects the Fed to cut interest rates twice, or by 50 bps, by June 2026. It forecasts inflation to increase to 3.2% by the end of 2026 with an average unemployment rate of 4.6%.
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