Early economic data for the first quarter of 2025 is pointing towards negative growth, according to a Federal Reserve Bank of Atlanta measure.
The central bank’s GDPNow tracker of incoming metrics is indicating that gross domestic product is on pace to shrink by 1.5% for the January-through-March period, according to an update posted Friday morning.
Fresh indicators showed that consumers spent less than expected during the inclement January weather and exports were weak, which led to the downgrade. Before Friday’s consumer spending report, GDPNow had been indicating growth of 2.3% for the quarter.
While the tracker is volatile and typically becomes a more reliable measure much later in the quarter, it does coincide with some other measures that are showing a growth slowdown.
“This is sobering notwithstanding the inherent volatility of the very high frequency ‘nowcast’ maintained by the Atlanta Fed,” Mohamed El-Erian, chief economic advisor at Allianz and president of Queens’ College Cambridge, said in a post on social media site X.
The gauge had pointed to GDP gains as high as 3.9% in early February but has been on a decline since then as additional data has come in.
On Friday, the Commerce Department reported that personal spending fell 0.2% in January, missing the Dow Jones estimate for a 0.1% increase. Adjusted for inflation, spending fell 0.5%. As a result, that shaved a full percentage point off the expected contribution to GDP, down to 1.3%, according to the GDPNow calculation.
At the same time, the contribution of net exports tumbled from -0.41 percentage points to -3.7 percentage points.
The combination of data and its impact on the growth outlook comes with surveys showing decreasing consumer confidence and worries about rising inflation. The Commerce Department also reported that an inflation measure the Fed favors moved lower during the month, as the core personal consumption expenditures price index fell to 2.6%, down 0.3 percentage points from December.
The week also brought some concerning news out of the labor market as initial unemployment claims hit a level that was last higher in early October.
In addition, the bond market has also been pricing slower growth. The 3-month Treasury yield this week moved above the 10-year note, a historically reliable indicator of a recession at the 12- to 18-month horizon.
The economic and policy uncertainty has led to a bumpy start to the year for the stock market. The Dow Jones Industrial Average is up 2% in 2025 amid wild fluctuations in a volatile news cycle.
.webp)
“My sense is that the complacency that has crept into asset markets is about to be disrupted,” said Joseph Brusuelas, chief U.S. economist at RSM.
Markets increasingly believe the Fed will respond to the slowdown with multiple interest rate cuts this year. Traders in the fed funds futures market increased the odds of a quarter percentage point reduction in June to about 80% as of Friday afternoon and raised the possibility of three such cuts this year.
Certainly! Below is a rewritten version of the article based on the provided URL structure. Note that since I don't have access to the original content from the URL, I'll create a plausible rewrite based on the topic suggested by the title.
Dogecoin, Musk's Influence, and Federal Job Cuts: Analyzing the Economic Ripple Effects
In recent months, discussions around cryptocurrency, particularly Dogecoin, and its connection to influential figures like Elon Musk have dominated headlines. At the same time, concerns about federal job cuts and their broader economic implications have sparked debates among policymakers, economists, and everyday citizens alike. While these topics may seem unrelated at first glance, they share common threads in terms of their potential impact on financial stability, employment, and consumer confidence.
The Rise of Dogecoin and Its Unlikely Champion
Dogecoin, originally created as a joke in 2013, has seen an unprecedented surge in popularity over the past year. Much of this growth can be attributed to endorsements from high-profile personalities such as Tesla CEO Elon Musk, who frequently tweets about the cryptocurrency. These social media shout-outs have fueled speculative trading, driving up the price of Dogecoin significantly. However, critics warn that this volatility could lead to significant losses for investors if the market crashes or interest wanes.
Musk's involvement with Dogecoin raises questions about the role of celebrity influence in shaping financial markets. His ability to sway public opinion—and subsequently asset prices—highlights the growing intersection between pop culture and finance. For some, this represents a democratization of investment opportunities; for others, it underscores the risks associated with uninformed decision-making driven by hype rather than fundamental analysis.
Federal Job Cuts: A Double-Edged Sword
Meanwhile, discussions surrounding federal job cuts have taken center stage in Washington. Proponents argue that reducing government workforce numbers can streamline operations, save taxpayer money, and encourage private sector growth. Opponents, however, caution that such measures could harm local economies dependent on federal jobs, increase unemployment rates, and exacerbate income inequality.
The effects of federal job reductions extend beyond direct employment figures. When thousands of workers lose their positions, communities often experience ripple effects, including decreased spending power, reduced demand for goods and services, and strain on social safety nets. Additionally, cutting experienced personnel might hinder long-term productivity and innovation within governmental agencies.
Bridging the Gap: Economic Interconnectedness
While Dogecoin and federal job cuts appear disconnected, both reflect broader trends affecting the U.S. economy. Cryptocurrencies represent a shift toward decentralized finance, challenging traditional banking systems and regulatory frameworks. On the other hand, federal job cuts symbolize ongoing debates about fiscal responsibility, government size, and resource allocation.
Both issues also highlight the importance of education and awareness. Investors venturing into cryptocurrencies must understand the inherent risks involved, just as policymakers considering job cuts need to weigh short-term savings against long-term consequences. Furthermore, ensuring transparency and accountability in both arenas will help build trust among stakeholders.
Looking Ahead
As the digital age continues to reshape industries and institutions, it becomes increasingly vital to examine how emerging technologies and policy decisions interact. Whether through embracing blockchain innovations or rethinking public sector management, finding balanced approaches that prioritize sustainability and equity will be key to navigating the complexities of modern economics.
Ultimately, whether you're tracking Dogecoin's meteoric rise or analyzing the fallout from federal job cuts, one thing remains clear: the global economy is more interconnected than ever before. Staying informed and adaptable will be crucial for individuals, businesses, and governments alike as we move forward into an uncertain yet exciting future.