US GDP set to show rapidly slowing economy amid increasing fears of recession
The United States (US) Bureau of Economic Analysis (BEA) is set to publish its preliminary estimate of first-quarter Gross Domestic Product (GDP) on Wednesday, with analysts expecting the data to show annualized growth of just 0.4%, a sharp slowdown from the 2.4% pace recorded in the final quarter of 2024.
Markets are on edge ahead of Wednesday’s release of the US preliminary GDP figures for the first quarter—widely considered the most market-moving estimate of the three issued each quarter. Beyond headline growth, the report also includes fresh Personal Consumption Expenditures (PCE) data, the Federal Reserve’s (Fed) preferred inflation gauge.
This quarter’s numbers carry particular weight, as investors look for early signs of the economic fallout from President Donald Trump’s newly imposed tariffs. With both output and domestic prices in focus, the data could offer crucial clues about the broader macroeconomic impact of the administration’s trade policies.
The release follows the Fed’s March 18-19 meeting, where policymakers delivered a mixed outlook in their latest Summary of Economic Projections (SEP), commonly referred to as the “dot plot.” Officials marked down growth expectations for 2025, even as they penciled in slightly stronger PCE inflation. The revisions reflect growing uncertainty within the central bank over the balance of risks to the US economy.
Also included in the report is the GDP Price Index – commonly called the GDP deflator – which measures inflation across all domestically produced goods and services, including exports but excluding imports. It’s expected to rise to 3.1% for the first quarter, up from 2.3% in the final months of 2024, offering further insight into how inflation is weighing on real output.
Adding to the caution, the Atlanta Fed’s GDPNow model – closely watched for its real-time tracking of economic activity forecasted a sharp 2.7% contraction in Q1 GDP as of its April 27 update.(cay)
Source: Fxstreet
