The US economy could shrink the fastest since the Covid-19 lockdown, according to the Federal Reserve Bank of Atlanta’s GDPNOW model.
The new forecast differs significantly from just a month ago, with the estimate that US GDP tracking 4% growth in the first quarter.
GDP trackers like the Federal Reserve Bank of Atlanta can be volatile, but some economic indicators also support the downward trend.
The possibility of a GDP fall could trigger the beginning of a recession that affected Trump, namely “Trump’s opinion.” US GDP has not shrunk by more than 2.8% since the second quarter of 2020. There, the world fell 32.9% as it closed due to the Covid-19 pandemic.
Change the Atlanta Fed’s GDPNOW estimate in the first quarter. Source: Federal Reserve Bank of Atlanta
The estimated fall may have been contributed by the US record $153 billion trade deficit in January, the Census Bureau reported on February 28th. The 25.6% increase in the trade deficit from December could have been a result of corporate front-loading imports before President Donald Trump implemented his first round of tariffs.
A February 25 survey from the conference committee showed that the consumer confidence index sank from 105.3 points on February 98.3.
Consumer spending also fell 0.2% in January, but under Trump it only fell for 11 days, but investors and billionaire Warren Buffett reportedly believe Trump’s tariffs could fuel more inflation and hurt consumers.
Macroeconomic concerns have been criticized for the recent slump in crypto prices, where Bitcoin (BTC) and ether (ETH) have fallen by 10.2% and 21.6% in the past two weeks.
Despite Trump’s promise to make America the world’s “crypto capital,” more than $670 billion has been shaved from crypto market capitalization, in part through the formation of a crypto strategic reserve since its launch on January 20th.
Related: Trump’s Crypto Spare Plan Facing Congressional Voting and Possibly Limiting Rally
Not all GDP models have the same harsh outlook as the Fed’s GDPNOW model in Atlanta.
The New York Federal Reserve model predicted a 2.9% increase in the first quarter in its latest February 28 update, while the Dallas Federal Reserve GDP tracker predicted a 2.4% increase on February 27.
The Atlanta Fed GDPNOW model mimics the way the Bureau of Economic Analysis uses to estimate changes in GDP, whereas New York’s applies Bayesian estimations and employs filtering techniques to evaluate a broader range of data.
The Dallas Federal Reserve focuses on state-level data and gathers a more local perspective on how economic growth is tracked.
Magazine: Elon Musk’s plan to run government on blockchain faces an uphill battle
