Atlanta Fed Projects 1.5% GDP Contraction for First Quarter of 2025

The revised forecast marks a sharp downturn from earlier estimates, raising concerns about economic slowdown and policy uncertainty.

The Atlanta Federal Reserve's GDPNow tracker estimates a 1.5% contraction in U.S. GDP for the first quarter of 2025, down from earlier projections of 2.3% growth.
The downgrade follows weaker-than-expected consumer spending in January, declining exports, and rising unemployment claims.
Inflation indicators showed mixed results, with core PCE inflation falling to 2.6% in January but year-ahead inflation expectations climbing to 4.3%.
Economic policy uncertainty, including fluctuating tariff announcements from the Trump administration, has dampened consumer and business confidence.
The bond market is signaling potential recession risks, with a yield curve inversion between 3-month and 10-year Treasury notes.