😨 New Data Signals U.S. GDP May Shrink in Early 2025

Key Takeaways

After nearly three years of steady quarter-on-quarter growth, U.S. GDP could shrink in the first quarter of 2025.
This -2.4% prediction comes from the GDPNow tracker as of March 6th.
It earlier predicted +2.3% growth in February.
The tracker is a mathematical model that updates its estimates as new economic figures (on spending, trade, investment etc) are released.

Trump Tariffs Have Everyone on Edge

There’s a lot happening in the U.S. economy right now.

The chief worry is consumer spending, which fell 0.5% QoQ in January.

Analysts say that inclement weather in January and the LA fires resulted in muted retail sales. They expected services spending to offset that; however that didn’t materialize.

Now, uncertainty over tariffs and how they will impact inflation is also hitting consumer sentiment. Which in turn may cool spending further.

Meanwhile, the merchandise trade deficit has also widened considerably as American importers raced to get goods in before being hit with tariff-related cost increases.

(Tariffs on many products that comply with the USMCA trade agreement have been delayed till April 2nd).