Navigating Economic Uncertainty: Breaking Down the Data
Economic Growth Outlook Faces Headwinds
- The Atlanta Federal Reserve Bank GDP forecast for Q1 2025 predicts a -1.5% contraction, triggering concerns
- Businesses stockpiled goods ahead of potential tariffs, which is weighing on economic growth
- Despite the negative Q1 outlook, economic growth could rebound in Q2, potentially reaching 4%, as trade normalizes
Uncertainty Surges to Its Highest Level Since the Pandemic
- Economic uncertainty has spiked, reflecting concerns over negative GDP growth, government downsizing, and Federal policy shifts.
- Driven by political divide, consumer sentiment fell sharply from 71.1 to 64.7 in February, its lowest reading since November 2023
Consumers and Businesses Adjust to Policy Shifts
- Consumers are spending less and saving more, with the savings rate rising from 3.5% in December to 4.6% in January
- Retailers and manufacturers rushed to import goods before tariffs take effect, distorting economic data for early 2025
*Through February 2025
The Economic Policy Uncertainty Index is a measure of policy-related economic uncertainty, derived from the frequency of news articles discussing economic policy uncertainty in leading U.S. newspapers. Higher values indicate greater uncertainty Sources: Marcus & Millichap Research Services, , Scott R. Baker, Nicholas Bloom, and Steven J. Davis.
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