The macro dossier on US growth is unusually bifurcated. On one side, Deer Point Macro and Capital Flows describe an economy reaccelerating through the second half of 2025 — credit creation firming, federal receipts rising, hiring intact, margins expanding off pre-tariff inventory. On the other, the New York Fed's DSGE model (a structural forecasting framework used by the Bank) puts the probability of a recession at 46 percent and cuts 2025 Q4/Q4 real GDP growth to 0.3 percent. Both cannot be right. The interesting question is which side the data tape vindicates first.
Start with the nowcast. The Atlanta Fed's GDPNow model tracks Q2 2025 real GDP at 2.9 percent, down from 3.4 percent on 18 June but still comfortably above any reasonable estimate of trend. The composition matters: net exports have swung up to a 3.49 percent contribution from 2.07 percent, while inventories have turned sharply negative at -2.22 percent from -0.42 percent. That is the signature of front-loaded import digestion, not demand destruction. Deer Point Macro reads the same tape and concludes that investment and consumption will carry growth higher into the second half. The dossier shows no dissent from private forecasters on this point — every named non-Fed voice sits on the reacceleration side.
Why the model and the tape disagree
The DSGE downgrade is being driven by cost-push shocks — the model's way of absorbing tariffs and other supply-side frictions it cannot directly observe. That same channel pushes the core PCE (the Fed's preferred inflation gauge, stripping food and energy) projection to 3.4 percent for 2025 and 2.1 percent for 2026, well above the March path. Crucially, the model also lifts the short-run real natural rate of interest — r*, the rate at which policy neither stimulates nor restrains — to 2.6 percent in 2025, higher than the June reading of 2.2 percent. A higher r* with the policy rate held flat means policy is mechanically less restrictive than headline real rates suggest. That is the seam through which the private bull case enters: if r* is drifting up and credit is expanding, the economy can run hot for longer than the recession probability implies.
The corporate-margin story closes the loop. Deer Point argues that pre-tariff inventory is acting as a buffer: until those stocks draw down, gross margins can keep expanding even as input costs notionally rise. That window is finite — sectors with weak pricing power, automotives chief among them, will roll over first — but in aggregate it sustains the equity earnings tape through year-end. The implication for Fed policy follows directly: with margins firm, hiring intact and core PCE still well above target, there is no forcing function for an aggressive cutting cycle.
Gross margins into the current quarter are expected to come in around 33 percent and continue to expand through the end of the year.
Operationalising the disagreement: the Atlanta Fed's 2.9 percent Q2 nowcast and the NY Fed's 46 percent recession probability are both live, high-caliber forecasts in this dossier, and they are pointing in opposite directions. The cleanest expression is on the policy path. Deer Point's call — no easing until September 2025, a single 25bp cut, one more before year-end, and any additional cuts priced by markets to be faded — is the Ledger Desk's base case. It is consistent with sticky core PCE, a rising r*, and a margin cycle that has not yet rolled. The risk to that view is not a recession the DSGE model can see; it is a credit-cycle inflection the structural model is too smooth to capture. Until then, the bar for the doves is higher than the curve implies.
Briefings are synthesised by the Ledger Desk from multiple sources cited in the sidebar. They are distinct from Articles, which are written by named contributors and carry a tracked Calibration Index. The Desk does not currently carry a Brier score; this is a deliberate choice for the v0.1 editorial layer and will be revisited.