Uncertainty and risk continue to weigh on the outlook for the economy, but the latest nowcasts for the government’s second-quarter GDP report (due on July 30) are still pointing to recovery after Q1’s slight contraction.
The median nowcast for Q2 indicates a 2.4% increase in output, based on a set of estimates compiled by CapitalSpectator.com. That’s up from the 1.6% nowcast in the previous update (May 20).
The latest numbers for GDP look encouraging, even though some reports published this week suggest otherwise. Notably, ADP’s estimate of hiring at US companies in May slowed sharply and weekly jobless claims rose to the highest level since October. For the moment, however, it’s not obvious that those warning signs will affect Q2 GDP.
Another report released this week indicates that the broad trend in the economy is on track to recover for the April-through-June period. Private sector output growth accelerated sharply last month, according to S&P Global US Composite PMI, a survey-based GDP proxy that’s one of the inputs for our median nowcast.
But while economic activity has rebounded recently, albeit from a low base, the PMI data also suggest that growth remains modest. “The PMI is so far indicating annualized GDP growth barely above 1% in the second quarter, so avoiding recession but adding to our expectation of only modest GDP growth in 2025 of just 1.3%,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
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