The first quarter is on track for negative GDP growth, Atlanta Fed indicator says
Source: CNBC
Early economic data for the first quarter of 2025 is pointing towards negative growth, according to a Federal Reserve Bank of Atlanta measure. The central bank’s GDPNow tracker of incoming metrics is indicating that gross domestic product is on pace to shrink by 1.5% for the January-through-March period, according to an update posted Friday morning.
Fresh indicators showed that consumers spent less than expected during the inclement January weather and exports were weak, which led to the downgrade. Prior to Friday’s consumer spending report, GDPNow had been indicating growth of 2.3% for the quarter. While the tracker is volatile and typically becomes a more reliable measure much later in the quarter, it does coincide with some other measures that are showing a growth slowdown.
“This is sobering notwithstanding the inherent volatility of the very high frequency ‘nowcast’ maintained by the Atlanta Fed,” Mohamed El-Erian, chief economic advisor at Allianz and president of Queens’ College Cambridge, said in a post on social media site X. The gauge had pointed to GDP gains as high as 3.9% in early February but has been on a decline since then as additional data has come in.
On Friday, the Commerce Department reported that personal spending fell 0.2% in January, missing the Dow Jones estimate for a 0.1% increase. Adjusted for inflation, spending fell 0.5%. As a result, that shaved a full percentage point off the expected contribution to GDP, down to 1.3%, according to the GDPNow calculation. At the same time, the contribution of net exports tumbled from -0.41 percentage point to -3.7 percentage points. The combination of data and its impact on the growth outlook comes with surveys showing decreasing consumer confidence and worries about rising inflation. The Commerce Department also reported that an inflation measure the Fed favors moved lower during the month, as the core personal consumption expenditures price index fell to 2.6%, down 0.3 percentage point from December.
Read more: https://www.cnbc.com/2025/02/28/the-first-quarter-is-on-track-for-negative-gdp-growth-atlanta-fed-indicator-says-.html
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