Economic uncertainties and weaker-than-expected data have prompted significant revisions to forecasts for the first quarter of 2025. Yahoo Finance reports that recent releases show a slowdown in the manufacturing sector and a notable decline in construction spending. The Atlanta Fed’s GDPNow tool, which integrates current data to estimate quarterly economic growth, predicted a 2.8% contraction in GDP for the first three months, a steep drop from an earlier forecast of a 1.5% fall.
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Data from IndexBox indicates a broader context where the manufacturing index from ISM fell to 50.3 in February, down from January’s 50.9, amid escalating costs faced by businesses. The prices paid index surged to 62.4, marking the highest level since July 2022, signaling heightened expenses for companies. The tariff policy, particularly those proposed against Mexico and Canada, contributes to this economic strain, affecting businesses and consumer spending patterns.
Amidst these developments, economic analysts have been adjusting their predictions. For example, Oxford Economics’ Bernard Yaros adjusted their GDP forecast for Q1 to 0.6% annualized, down from 1% last week. This is a significant reduction from the 2.5% expected in their February baseline forecast. Likewise, JPMorgan revised their GDP prediction to 1.5%, down from 2.25%, while Goldman Sachs adjusted their estimate to 1.6%, from an initial 2.6% in late January.
Nonetheless, confidence in the labor market persists as the February jobs report nears. Economists project the addition of 160,000 jobs, with the unemployment rate maintaining at 4%, a signal that labor market conditions may not fully mirror the downturn reflected in GDP forecasts.
