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# The Economy Is Tracking Three and a Half Percent Growth and Added Twenty Nine Thousand Jobs
- URL: https://millionaire-insiders.ghost.io/the-economy-is-tracking-three-and-a-half-percent-growth-and-added-twenty-nine-thousand-jobs/
- Published: 2026-10-19T11:30:00.000Z
- Updated: 2026-10-19T11:29:59.000Z
- Author: Daniel Whitmore

The Atlanta Federal Reserve's GDPNow model put third quarter growth at 3.6% on an annualised basis as of October 8\. That would be a strong quarter by any standard of the past two decades.  
  
The same quarter ended with an employment report showing 29,000 jobs added in September, unemployment rising to 4.2%, and 60,000 jobs removed from the two previous months by revision. Strong output, almost no hiring. Those two statements have to be reconciled, and how you reconcile them determines what you expect next.

### What a nowcast is and is not

GDPNow is not a forecast. It is a mechanical model that takes the official statistics already published for the quarter and fills in the thirteen components of gross domestic product as the data arrive, updating six or seven times a month. The Atlanta Fed is explicit that it is not the bank's own view of anything.  
  
Knowing how it is built explains why it moves. On October 8 the estimate fell from 3.7% to 3.6% purely because a wholesale trade report reduced the estimated contribution from inventories to 1.98 percentage points from 2.07\. Nothing happened to the economy that day; a single data release changed one input.  
  
That inventory figure deserves attention in its own right. Roughly two percentage points of a 3.6% nowcast is inventory accumulation, which is companies producing goods that have not been sold yet. Inventory contributions are the least durable part of any GDP number: they add to one quarter and subtract from the next when the stock is worked down.  
  
The net export line is working the other way, a drag of 2.69 percentage points, which is what happens when imports run ahead of exports.

### Three explanations, and they are not equally comfortable

**Whitmore's Watchlist:**  
\> **IVV** (iShares Core S&P 500 ETF): The broad market, which has been pricing the output number rather than the employment one.  
\> **ROBO** (ROBO Global Robotics and Automation Index ETF): Companies selling the equipment that produces output without hiring.  
\> **SCHR** (Schwab Intermediate-Term U.S. Treasury ETF): The part of the curve that reacts first if the labour reading wins the argument.  
  
The first explanation is productivity. Output per worker is rising, so the same number of people produce more, and employment growth slows without output growth slowing. This is the benign reading, it is consistent with heavy investment in automation and software, and if true it is the best macroeconomic news available because it allows growth without inflation.  
  
The second is measurement. The two numbers come from different surveys with different methods and different revision histories, and the payroll series in particular has been revised down repeatedly this year. A gap this wide between output and employment often narrows later, usually by the output figure coming down rather than the employment figure going up.  
  
The third is composition. A quarter whose growth is two points of inventory build and a large investment contribution is a quarter driven by capital spending rather than by hiring. Building a data centre produces a large investment number and a small payroll number, by design.

### What follows for the October meeting and after

For the Federal Reserve, meeting on October 28, the output figure argues that the economy can absorb another increase and the employment figure argues that it cannot. Inflation at 3.7% headline and 2.6% core sits awkwardly on top of both.  
  
The committee's own projections assumed growth of about 2.3% this year with unemployment at 4.1%. Reality has delivered faster growth and higher unemployment at the same time, which is not a combination any single model handles gracefully.  
  
For a portfolio the useful question is which number your holdings are priced on. Equity markets at record levels are priced on the output and earnings side. Rate sensitive assets and anything geared to consumer credit are priced on the employment side. Both cannot be right for long, and the resolution is what the next two employment reports and the Bureau of Economic Analysis's first official estimate of the quarter will supply.  
  
Until then, treat the nowcast as what it is: a careful running total of data already published, not a prediction, and not a vote.  
  
**Whitmore's Take**: Two points of a 3.6% nowcast are inventories, which borrow from next quarter rather than add to this one. Worth knowing whether what you own is priced on the growth number or the jobs number, because this year they have stopped agreeing.

![](https://storage.ghost.io/c/e9/10/e9109ad9-55f9-4e96-a078-46af25115156/content/images/2026/10/growth-without-hiring-2.jpg)

*Written by Daniel Whitmore* 
*Millionaire Insiders*