Overview

• The Atlanta Federal Reserve's GDPNow model predicts a 2.8% contraction for Q1 2025, a sharp drop from earlier estimates of 2.3% growth just last week.
• This projection marks the fastest anticipated GDP decline since the pandemic lockdown, with significant volatility in recent forecasts.
• Economic uncertainty stems from President Trump's trade policies, including looming 25% tariffs on goods from Mexico and Canada, as well as cuts to federal spending and workforce reductions.
• Weak consumer sentiment, declining retail sales, and a record-high $153 billion trade deficit in January are contributing factors to the negative outlook.
• Market reactions include a 9% drop in the Nasdaq over 10 days and falling Treasury yields, signaling investor concerns over potential economic turbulence.