Atlanta Fed Projects Sharp Economic Contraction for Q1 2025

The latest GDPNow estimate forecasts a 2.8% decline, raising concerns of a potential recession driven by trade policies and economic uncertainty.

The Atlanta Federal Reserve's GDPNow model predicts a 2.8% contraction for Q1 2025, a sharp drop from earlier estimates of 2.3% growth just last week.
This projection marks the fastest anticipated GDP decline since the pandemic lockdown, with significant volatility in recent forecasts.
Economic uncertainty stems from President Trump's trade policies, including looming 25% tariffs on goods from Mexico and Canada, as well as cuts to federal spending and workforce reductions.
Weak consumer sentiment, declining retail sales, and a record-high $153 billion trade deficit in January are contributing factors to the negative outlook.
Market reactions include a 9% drop in the Nasdaq over 10 days and falling Treasury yields, signaling investor concerns over potential economic turbulence.