The Atlanta Federal Reserve’s GDPNow tracker indicates that the US economy is on pace for a 1.5% contraction in the first quarter, according to a recent update. While the tracker’s volatility is typical throughout the quarter, it coincides with other indicators showing a slowdown in growth.
Early data from the first quarter of 2025 points towards negative economic performance, with consumers spending less than expected due to inclement weather and weak exports contributing to the downgrade. The GDPNow tracker had previously indicated 2.3% growth for the quarter before this update.
Economists have expressed caution, citing decreasing consumer confidence and concerns about rising inflation. A recent report showed a decrease in the core personal consumption expenditures price index to 2.6%, down 0.3 percentage points from December.
The labor market also received concerning news, with initial unemployment claims hitting a level last seen in early October. The bond market is pricing in slower growth, as the 3-month Treasury yield moved above the 10-year note, a historically reliable indicator of recession.
Market experts warn that complacency in asset markets may be disrupted soon, with increased odds of interest rate cuts from the Fed this year. Traders believe there will be at least one quarter percentage point reduction in June, and possibly three such cuts total.
Source: https://www.cnbc.com/2025/02/28/the-first-quarter-is-on-track-for-negative-gdp-growth-atlanta-fed-indicator-says-.html