Atlanta Fed Predicts Q1 Economic Contraction

The Atlanta Federal Reserve's GDPNow tracker has revised its first-quarter 2025 forecast to predict a 1.5% contraction in the U.S. economy, marking the first quarterly decline since early 2022. This revision from a previous 2.3% growth estimate follows weak consumer spending, a significant trade deficit, and rising inflation concerns. The GDPNow indicator, although volatile and not an official forecast, reflects growing worries about the economic outlook amid recent macroeconomic policy uncertainties. The contraction forecast is a stark departure from the strong 2.3% GDP growth recorded in the fourth quarter of the previous year. Imports have increased as firms anticipate higher costs due to proposed tariffs, further impacting GDP negatively. Policymakers and markets are closely monitoring these developments as they signal potential recessionary pressures.