The first quarter is on the way of negative growth of GDP, says Atlanta Fed Indicator

The first economic data for the first quarter of 2025 point to negative growth, according to a measure of the Atlanta Federal Reserve Bank.

The Central Bank Chorlea The incoming metric tracker indicates that the gross domestic product is in pace to reduce 1.5% for the period from January to March, according to an update published Friday morning.

The new indicators showed that consumers spent less than expected during the implemence of the January weather and exports were weak, which led to the reduction. Before the consumer spending report on Friday, GDPnow had been indicating a 2.3% growth for the quarter.

While the tracker is volatile and generally becomes a more reliable extent much later in the room, it coincides with other measures that show a slowdown of growth.

“This is alencing despite the inherent volatility of the very high frequency ‘now, since Atlanta’s Fed,” said Mohamed El-Erian, Chief Economic Advisor of Allianz and president of Queens’ College Cambridge, said In a publication On the social media site X.

The meter had indicated GDP profits up to 3.9% in early February, but has decreased since then, since additional data has arrived.

Friday, the INFORMED COMMERCIAL DEPARTMENT That personal expense fell 0.2% in January, losing Dow Jones’ estimate for an increase of 0.1%. Adjusted by inflation, the expense fell 0.5%. As a result, that shaved a complete percentage point of the expected contribution to GDP, up to 1.3%, according to the GDPnow calculation.

At the same time, the contribution of net exports fell from -0.41 percentage points to -3.7 percentage points.

The combination of data and its impact on the growth perspective comes with Surveys that show a decrease in consumer confidence and concerns about increasing inflation. The Commerce Department also reported that an inflation measure of the FED favors reduced during the month, since the basic personal consumer expenses price index fell to 2.6%, a lower percentage point of 0.3 since December.

The week also brought some news about the labor market such as Initial unemployment claims Hit a level that was the last highest in early October.

In addition, the bond market has also had a slower price. The 3 -month Treasury performance this week moved above the 10 -year note, a Historically reliable indicator of a recession on the horizon of 12 to 18 months.

Economic and political uncertainty has led to a start of potholes of the year For the stock market. The Dow Jones industrial average has increased by 2% in 2025 in the middle of wild fluctuations in a volatile news cycle.

“My sense is that the complacency that has been infiltrated in asset markets is about to be interrupted,” said Joseph Brusuelas, chief economist of RSM.

The markets believe more and more that the Fed will respond to the deceleration with multiple cuts of interest rates this year. Merchants in the Fed Fed futures market increased the probabilities of a reduction from a percentage point in June to approximately 80% to Friday afternoon and increased the possibility that three cuts of this total type in this year.