The American economy is on the right track of the negative gross domestic product in the first quarter of Trump
The American economy is already sliding in 2025, and the numbers do not seem good for President Donald Trump, who regained oval on January 20.
According to the Federal Reserve in Atlanta, GDP is on the right path to contracting by 1.5 % in the first quarter, with a decrease in growth estimate by 2.3 % only five weeks ago.
gross domestic product TrackerIts updates are actually based on the data received, which were used for a reference to 3.9 % of growth, but new numbers from the Trade Department were sent to their decline.
An economic report issued on Friday morning showed that personal spending decreased by 0.2 % in January, and the loss of Dow Jones, an increase of 0.1 %. After adjusting inflation, it was worse – a 0.5 % decrease, which is enough to wipe a full percentage of gross domestic product expectations.
The American economy depends greatly on spending on consumers, as it compensates for more than two -thirds of GDP. A 0.2 % decrease may seem small, but it is the largest monthly decrease in four years. The strike came from the weakest retail sales than expected, as the Americans fell to spending due to high inflation, uncertainty in politics and the fluctuation of the market.
“This is the sober despite the highly high frequency fluctuation,” said Mohamed El -Erian, the chief economic advisor in Allianz and head of the Cambridge College at the social networking site X.
Meanwhile, exports took great success, and withdrawn the gross domestic product further. The Ministry of Commerce stated that the contribution of net exports to GDP has collapsed from -0.41 points to -3.7. the reason? Standard 153.3 billion dollars in the trade deficit in January. Economists say this may be the result of storing business that stores imports before Trump’s potential tariffs, which increases the poor commercial gap.
The markets interact with the opposite of bond returns and swinging stocks
Wall Street does not ignore the warning signs. The most reliable recession is the most reliable stagnation indicator: the inverted return curve. The treasury returns increased for 3 months over a 10 -year note, a pattern historically indicated an economic shrinkage within 12 to 18 months.
Dow Jones Industrial Value was on Rollercoasster. The index still rises by 2 % for this year, but it was largely volatile, as its reaction to every new part of the economic data was. S&P 500, which increased by 6 % between election day and February 19, decreased by 3.1 % from the time of the press, according to Data From Google Finance.
Meanwhile, the Federal Reserve is under pressure as traders in the Funds Future market are pricing 80 % in a rate reduction in June, with expectations of three total discounts by the end of 2025.
If the Federal Reserve Speaker moves Jerome Powell very quickly with price cuts, then inflation can explode again. If waiting for a long time, the slowdown may lead to a complete recession.
The economists of Piper Sandler had previously expected 2 % growth, but now they expect 2 % contraction. Some economists are not convinced that the slowdown will continue. Recently, in early January, a survey in Wall Street Journal of Economists expected 2.2 % growth in GDP in the first quarter. Many of these expectations have not changed despite the dark expectations in Atlanta.
Trump’s policies add uncertainty to the economic view
Economic slowdown does not happen in a vacuum. Trump’s return to the White House has shook politics, and companies are not sure of what will happen next. His definition threats have already pushed inflation forecasts up, which could complicate the response of the Federal Reserve.
“With inflation recently at the highest level of 40 years, now it is not the time to ignore our guard,” said Jeff Schmid, head of the Kansas City Federal Reserve,. The central bank has spent the past two years to fight inflation, and if expectations start to rise again, Powell may be forced to stop price discounts even with poor economy.
The uncertainty appears in commercial morale data. The Conference Council found that the confidence of the CEO reached the highest level of three years in early February. But not everyone is very optimistic – the S& P Global February Scanner of Procurement Managers showed a sharp decrease in optimism for the next year.
Meanwhile, the labor market shows early signs of problems. Initial unemployment claims have reached its highest level since early October. The unemployment rate, which decreased to 4 % in January, remains historically low, but workers’ demobilization began to shift.
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