The Good, The Bad, and the Ugly, Part 2. The BEA Revises Q2 GDP Upward.
Atlas Analytics’ Weekly Subscriber Update
Long time readers will recall that our Q2 2025 GDP prediction was a large number: +4.3%.
They will also remember that the Bureau of Economic Analysis (BEA) released the first estimate of Q2 GDP at the end of July at 3.0%.
On Thursday (August 28), the BEA released their second estimate for Q2 GDP: +3.3%. This number is not only closer to Atlas Analytics’ original prediction, but it is also exactly what we said would happen: an upward revision due to late quarter consumer spending and investment outlays.
To break down the first release, we used a familiar archetype: the Spaghetti Western version of The Good, The Bad, and the Ugly.
Today, we released the sequel: The Good, The Bad, and the Ugly (Part 2): Atlas Analytics’ Revenge.
The Good
So what happened?
GDP was revised up from +3.0% to +3.3% largely due to an increase in Core GDP from a pallid +1.1% to a more robust +1.6%. This is exactly what Atlas Analytics predicted in both our YouTube video from July 17 and our Substack article from August 3.
Here’s what we wrote on August 3 about the likely shortfall in measuring Core GDP:
“The shortfall came in Core GDP, the economic ‘heartbeat,’ where we saw a late-quarter surge that likely wasn’t fully captured in the BEA’s advance read. We expect that late surge, especially in June, will show up in future revisions…”
Jake Schneider, Founder & CEO of Atlas Analytics, August 3, 2025
Judging from the chart above, it wasn’t Net Exports or Private Inventories that were meaningfully revised (both changed by less than 10 basis points). It was Core GDP, and it pushed up by nearly half a percentage point (50 basis points).
Bingo.
And the revisions are not over yet. The final BEA Q2 GDP number will not be released until September 25, nearly three months after the quarter’s end.
This validates our hypothesis: Atlas Analytics’ algorithm ROY works not for the first print of GDP but for the true value released months later.
As we wrote previously: “It’s trained to match reality. And reality tends to reveal itself over time.”
The Bad
Still, even after the revision, Atlas Analytics’ prediction is still a ways off (1 percentage point).
Where was the short fall?
As the graphic above shows, Core GDP (from ROY) missed significantly despite the revised estimate from +1.1% to +1.6%.
We expect this number to be revised even higher, perhaps in the low-2’s.
Even so, that would still demonstrate a large deviation from our long-term trend of predicting Core GDP over the past 7 quarters, which, as evident from the chart, has been excellent.
What happened? Stay tuned for the next episode of The Good, The Bad, and The Ugly for more details.
The Ugly
A new sheriff’s in town. And it’s not the Fed.
Yes, the Atlanta Fed is still technically closer (0.9 percentage points deviation versus 1.0), but they were riding in the wrong direction. We called the upside surprise, and that’s exactly what happened.
Showdown at the GDP Corral
This town isn’t big enough for the both of us. As the BEA fires off its final Q2 number on September 25, we’ll be there waiting with pistols loaded and models calibrated.
Don’t wait for the BEA’s slow-moving wagons to circle back. Get Atlas Analytics’ real-time forecasts delivered before the smoke clears.
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