The US economy experienced anemic first-quarter growth of 0.3%, according to a survey of 14 economists by CNBC’s Rapid Update. This is the weakest growth since 2022 and follows a decline in consumer and business sentiment from the emerging trade war.
Core PCE inflation, the Fed’s preferred inflation indicator, is expected to remain stuck at around 2.9% for most of the year before resuming its decline in the fourth quarter. The latest data shows real, or inflation-adjusted consumer spending rose just 0.1% in February, after a decline of -0.6% in January.
A surge of imports ahead of tariffs is believed to have contributed to the slowdown. However, economists are optimistic that the import effect will abate, and most forecast a gradual rebound in economic growth. Second-quarter GDP is expected to average 1.4%, with third-quarter growth at 1.6% and fourth-quarter growth rising to 2%.
The danger of an economy with anemic growth is that it could easily slip into negative territory. With new tariffs set to come this week, recession risks are rising. Moody’s Analytics warns that GDP may decline in the first and second quarters of the year, and a recession will be likely if the president doesn’t begin backtracking on the tariffs by the third quarter.
Stubborn inflation will complicate the Fed’s ability to respond to flagging growth. Core PCE inflation is expected at 2.8% this quarter, rising to 3% next quarter and staying roughly at that level until it drops to 2.6% a year from now.
Source: https://www.cnbc.com/2025/03/31/first-quarter-gdp-growth-will-be-just-0point3percent-as-tariffs-stoke-stagflation-conditions-says-cnbc-survey.html