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The Atlanta Fed’s GDPNow tracker of incoming data is indicating that gross domestic product is on pace to shrink by 1.5% for the first quarter.
While the tracker is volatile through the quarter and typically becomes more reliable much later in the quarter, it does coincide with some other indicators showing a growth slowdown.

A customer shops for produce at an H-E-B grocery store on Feb. 12, 2025 in Austin, Texas.
Brandon Bell | Getty Images

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. Prior to 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 point 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 point 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 also has been pricing in 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.
“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 total this year.

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Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldThe US trade goods deficit surged to a record high in January as companies hoovered up supplies of foreign products and metals ahead of the expected imposition of tariffs by President Donald Trump. The gap between exports and imports of goods jumped by more than 25 per cent from the previous month to $153bn, according to figures from the commerce department. That massively outweighed economists’ predictions for a shortfall of $116bn, according to a Bloomberg survey ahead of the numbers. The figures suggested American companies had been stockpiling goods purchased overseas as they prepared for tariffs on a host of the country’s closest trading partners, including Canada, Mexico, China and the EU, analysts said. Among the possible drivers were shipments of gold bullion into the US, they added. “It’s a massive increase,” said James Knightley, an economist at ING. “It strongly hints that a lot of US retailers and manufacturers are very nervous about supply chains and are wanting to get ahead of the threat of any tariffs.” While US exports rose a seasonally adjusted 2 per cent on the prior month, imports were up by more than 11 per cent, according to the advanced data for the month. Imports of industrial supplies were up nearly 33 per cent. Full breakdowns of the geographical pattern of the data are not yet available. One possibility, analysts said, is that the data had been driven by a surge in gold shipments from Europe to New York amid fears that Trump would impose tariffs on bullion. Analysts at Goldman Sachs said they expected this impact on the data to reverse “relatively quickly”. The value of the gold stored at the New York Comex exchange surged by about $25bn in January, according to Financial Times calculations, as traders pulled gold from London and moved it to New York to get ahead of potential tariffs.However, shipments of consumer goods were also up sharply on the month, jumping by more than 8 per cent, according to the US data — although automotive imports rose a modest 2 per cent. The ports of Los Angeles and Long Beach, California — two of the nation’s most active container ports — each recorded their busiest January on record. Long Beach said the rise was “largely driven by retailers moving cargo ahead of the anticipated tariffs on goods from China, Mexico and Canada”. Imports of photovoltaic panels and other solar energy equipment increased fourfold between December and January to more than 59,000 20-foot equivalent container units, according to ImportGenius, a trade data aggregator. US-based manufacturer First Solar this week told analysts that warehouse rental rates had increased in part because of “a surge of imports as manufacturers seek to mitigate the expected tariff risk following the November election”.This week Trump said he would press ahead with 25 per cent levies on EU products. He has already imposed an extra 10 per cent duty on China, and reiterated that 25 per cent tariffs on Canada and Mexico would come into force on March 4. Further tariffs loom on China, as well as reciprocal tariffs on countries around the world later in the spring. Many US corporate executives have downplayed concern over the levies. “We’ve been through this before and we have a great track record of working with our suppliers to make sure we stay as sharp as possible on value,” Richard McPhail, chief financial officer at Home Depot, said in an interview on Tuesday.“At this point, though, we don’t know how much might be implemented or which products.”Brad Setser, a senior fellow at the Council on Foreign Relations, said the 25 per cent tariffs that Trump had threatened on some economies’ products were “pretty brutal”, meaning that companies would seek to get ahead of them. “These are big enough tariffs that people are not indifferent to them but will try to avoid them,” he said. Knightley said the latest data would contribute to downside risks to first-quarter GDP data. “The narrative is shifting to the idea that [economic] euphoria around Donald Trump might be a bit overplayed,” he said. Additional reporting by Valentina Romei More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldDonald Trump has gone awfully quiet about the stock market. In the early stages of his first term in office, it was one of his favourite topics of conversation on social media, and who can blame him? The benchmark S&P 500 index of US stocks climbed by 13 per cent from election day in 2016 to the end of the following February and rounded out the year with a smooth 20 per cent rise. This time around, it is somewhat different. US markets are up by a more sedate 2.5 per cent over the same timeframe, down hard from post-election highs, while markets in Europe have ripped higher and even China is starting to shake off its on-and-off “uninvestable” label.JPMorgan points out that in his first term in office, the president tweeted favourably about the stock market’s performance 156 times. Since 2024, his social media platform of choice has changed, but so has this topics: he has posted about it just once.“During his first mandate, President Trump was continuously posting on positive US economic developments in a large sense, with dozens of tweets about lower unemployment, higher stock market or the creation of a new factory in a specific state for instance,” the bank wrote. “This aspect has disappeared, as most of the current posts regarding the ‘US economy’ are on debt ceiling, government spending/efficiency or tariff benefits.”The second-term president clearly has time to bump up the tally of social media posts, having been in office for a little over a month. But the contrast with the start of the first term is striking. It reflects an increasingly clear pattern, which is that pretty much all the so-called Trump trades have now petered out. The mood in markets has darkened over the past week or so and the all-important narrative has soured. The nebulous market force of vibes, mood and narrative shouldn’t matter — but it does. A few weeks ago, Trump’s beloved import taxes were viewed as inflationary, and even as a marginal source of growth for domestic manufacturing. Now, a new narrative has taken hold — that they are likely to damage the economy and that some of the early inflationary forces were down to US importers front-loading purchases to avoid painful price hikes. Efforts to cut federal spending have been seen as a helpful dose of fiscal rectitude. Now they appear to risk sapping the fuel away from the economy.Short-term US data releases are also not helping the mood. Retail sales recently posted their biggest decline in nearly two years. Consumer confidence has fallen by the largest degree in four years. The rise in optimism among small businesses also appears to have peaked. Blaming all this on cold winter weather will get you only so far. Citi’s economic surprise index shows that US data releases keep on missing Wall Street forecasts, while Europe keeps on beating them. It’s not all bad for the US. “We remain bullish on the economic outlook,” wrote Torsten Slok at Apollo this week. “But we are very carefully watching the incoming data for signs if this is an inflection point for the business cycle.”Some content could not load. Check your internet connection or browser settings.The most popular trades centred around the new president are now clearly in trouble. “You are seeing the unwinding of the Trump trades,” said Jimmy Chang, chief investment officer at the Rockefeller Global Family Office. “The initial reaction after the election was that Trump means America first: higher growth, higher inflation, higher interest rates and a stronger dollar.” All of those convictions are crumbling. For good measure, add bitcoin to the list. It has dropped 26 per cent from its January high. Stocks have fallen by a substantial 4.5 per cent from the highest point of this month — from a high base, granted, but the contrast with a rare bright spot in European markets is stark. Jim Caron at Morgan Stanley Investment Management said he had been making the case for somewhat higher allocations to Europe since the start of this year, though even in Europe he has often been “laughed off” as an “optimistic American”. “What I find about this trade is that a lot of people hate it,” he said — a decent indication that more buyers are yet to arrive.In the US, it is telling that one of the biggest decliners among big listed companies is electric vehicle maker Tesla — the highest-profile commercial venture of billionaire-turned-presidential-adviser Elon Musk. Tesla sales are declining rapidly, especially in Europe. This might be partly due to increased competition but also a consumer backlash against Musk’s aggressive cost-cutting measures for the US government and unnerving political interventions. Its shares have dropped a hefty 40 per cent since mid-December.One Trump trade is still motoring along just fine, however: the rouble. The Russian currency has climbed nearly 30 per cent this year against the dollar, with little sign of a pullback. Make Russia Great Again, I guess.For US markets, to a large extent, investors are pulling off their favourite trick: looking at precisely the same information as before, and coming to a whole new conclusion about it. Sentiment is a fickle thing. But this feels like the week the Trump trades went on life support. The president might find it tough to talk them back up again.katie.martin@ft.com More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldValeo and Forvia, two leading French car suppliers have warned they would be unable to absorb the costs of US President Donald Trump’s tariffs, which are set to hit Europe’s struggling automotive supply chain.Trump on Thursday threatened to impose 25 per cent tariffs on EU goods, including on the car sector. The threat comes as the industry waits for a US decision on similar duties on goods from Canada and Mexico. “There are no margins in the car industry and in particular among car suppliers to absorb even a part of these tariffs . . . I don’t know what the carmakers will do,” said Christophe Périllat, Valeo chief executive, on Friday.He added that the costs would be passed on to clients, a point reiterated by Patrick Koller, his counterpart at rival Forvia.Koller said at a results presentation that Forvia faced significant tariff risk for its operations in Mexico. “We’re almost absent in Canada . . . but we’ve got significant flows from Mexico to the US,” he said.The tariffs threaten to hit an industry already weighed down by a slowdown in demand for cars and an expensive transition towards battery-powered vehicles, amid growing competition from Chinese EV start-ups. Shares in Valeo dropped 15 per cent and Forvia fell almost a fifth on early trading on Friday. The businesses reported falling profits on Thursday evening and Friday morning respectively. Both businesses said that they expected largely flat sales in 2025.Shares in German automotive suppliers Continental and Schaeffler, which in recent years have shed thousands of jobs, on Fridays sunk nearly 2 and 3 per cent, respectively.Both business leaders said there were limits to how much they could adapt to tariffs, if Trump follows through on his threat to raise trade barriers with America’s closest neighbours. Despite the warnings from the executives, it is unclear to what extent the companies could negotiate higher prices with the carmakers they supply. They both work with European, Asian and American carmakers.“We can’t adapt in terms of industrial footprint or the footprint of our suppliers in the space of a few days or months; that takes years. In the US, we’ve got a historic base with experienced factories,” said Périllat.“Today, we’re trying to understand because it’s complicated and it changes every day,” he added.Europe’s automotive supply chain has seen increasing levels of job cuts as companies have turned to cost-cutting for survival. Lay-offs by European car suppliers doubled across the continent in 2024, according to figures from the European Association of Automotive Suppliers. Some 11,000 jobs were last year lost in the German sector alone, according to industry group VDA.Margins for traditional automotive suppliers fell an average of between 3 and 5 per cent in the five years to 2022, according to analysis by Lazard and Roland Berger, as companies took on large costs to develop products for electric cars and sales in Europe slowed drastically amid higher living costs. More

The personal consumption expenditures price index, the Federal Reserve’s preferred inflation measure, increased 0.3% for the month and showed a 2.5% annual rate.
Excluding food and energy, core PCE also rose 0.3% for the month and was at 2.6% annually. Fed officials more closely follow the core measure as a better indicator of longer-term trends.
Personal income posted rose 0.9% against expectations for a 0.4% increase. However, the higher incomes did not translate into spending, which decreased 0.2%, versus the forecast for a 0.1% gain.

Inflation eased slightly in January as worries accelerated over President Donald Trump’s tariff plans, according to a Commerce Department report Friday.
The personal consumption expenditures price index, the Federal Reserve’s preferred inflation measure, increased 0.3% for the month and showed a 2.5% annual rate.

Excluding food and energy, the core PCE also rose 0.3% for the month and was at 2.6% annually. Fed officials more closely follow the core measure as a better indicator of longer-term trends. The 12-month core measure showed a step down from the upwardly revised 2.9% level in December. Headline inflation eased by 0.1 percentage point.
The numbers all were in line with Dow Jones consensus estimates and likely keep Fed Chair Jerome Powell and his colleagues on hold for the time being regarding interest rates.
The inflation report was “good, but we’re not done,” said Jose Rasco, chief investment officer for the Americas at HSBC Global Private Banking and Wealth Management. “So that prudent patient Powell, as I call him, is going to remain in play, and I think he’s going to wait.”
Elsewhere in the report, income and spending numbers showed some surprises.
Personal income posted a much sharper increase than expected, up 0.9% on the month against expectations for a 0.4% increase. However, the higher incomes did not translate into spending, which decreased 0.2%, versus the forecast for a 0.1% gain.

The personal savings rate also spiked higher, rising to 4.6%.
Stock market futures pointed higher following the report while Treasury yields were mostly lower.
The report comes as Fed policymakers weigh their next move for interest rates. In recent weeks, officials mostly have expressed hopes that inflation will continue to gravitate lower. However, they have indicated they want more evidence that inflation is headed sustainably back to their 2% goal before they will lower interest rates further.
Goods prices rose 0.5% on the month, pushed by a 0.9% increase in motor vehicles and parts as well as a 2% jump in gasoline. Services increased just 0.2% and housing rose 0.3%.
Following the report, futures traders slightly raised the odds of a June quarter percentage point rate cut, with the market-implied probability now just above 70%, according to the CME Group’s FedWatch gauge. Markets expect two cuts by the end of the year, though the odds for a third reduction have risen in recent days.
Though the public more closely follows the consumer price index, released earlier in the month by the Bureau of Labor Statistics, the Fed prefers the PCE measure because it is broader based, adjusts for changes in consumer behavior and places considerably less emphasis on housing costs.
The CPI for January showed an all-items inflation rate of 3% and 3.3% at the core.

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People shop and walk in the shopping streets in the city center of Munich, Bavaria, Upper Bavaria, Germany, on February 20, 2025.
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German annual inflation came in at an unchanged but higher-than-expected 2.8% in February, provisional data from statistics agency Destatis showed Friday.
The print is harmonized across the euro area for comparability. 

The February print compares to a 2.7% estimate from economists surveyed by Reuters. The January harmonized annual inflation reading had come in at 2.8%, unchanged from December.
German inflation had fallen below the 2% European Central Bank target in September last year, but re-accelerated after and has remained above the crucial mark for five months in a row now.
The German data arrives ahead of the consumer price index print for the euro zone on Monday and the latest ECB decision later next week. The central bank in January cut interest rates for the fifth time since starting to ease monetary policy last summer and markets are widely pricing in another trim on Thursday.
The figures are also one of the first key economic data points to be released since the German election last weekend, in which the conservative alliance between the Christian Democratic Union and the Christian Social Union secured the largest share of votes.
This puts their lead candidate Friedrich Merz in line to take over from Olaf Scholz as chancellor, although it appears likely that the CDU-CSU will form a governing coalition with Scholz’s Social Democratic Party.

Economics was a hot topic during campaigning, with Merz suggesting that his policy plans — including income and corporate tax cuts, less bureaucracy, changes to social benefits and deregulation — would give the country’s economy a needed boost. Germany’s gross domestic product has long been hovering around recession territory, and shrank 0.2% after price, seasonal and calendar adjustments in the last quarter of 2024 from the previous three months, according to Destatis.
This breaking news story is being updated. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.India’s economic growth has rebounded after bountiful harvests boosted rural consumption and the government of Prime Minister Narendra Modi ratcheted up spending.Government data on Friday showed India’s GDP grew 6.2 per cent in the quarter to the end of December from the same period a year earlier, offering some relief to Modi, who has recently sought to cushion the squeezed middle-class.Growth was up from the revised 5.6 per cent in the three months to the end of September, but below the 6.3 per cent forecast by a Reuters poll of economists and the central bank’s 6.8 per cent estimate.Even though India’s GDP has been expanding faster than any other major economy, the shine has come off after three previous consecutive quarters of slowing growth due in part to weak corporate investment and waning consumption among urban Indians who form the backbone of the economy.Many economists believe India needs to maintain around 8 per cent GDP growth to hit Modi’s goal of making it a developed nation by 2047 — the centenary of independence. On Friday, the government revised up its growth forecast for the full financial year ending in March by only 0.1 percentage point to 6.5 per cent.“Today’s data reiterated that growth has bottomed out in the September quarter,” said Anubhuti Sahay, head of India economic research at Standard Chartered, adding that the “broader narrative” of a “cyclical slowdown and weak private sector investment remains intact”.Net foreign investment during April to December fell to about $1.2bn, down from $7.8bn over the same period in the previous year, according to central bank data. India’s stock market has also experienced an exodus of overseas funds.Modi’s government is attempting to bolster the economy through tax breaks announced in this year’s budget for middle-class Indians, who have been squeezed by stagnant wages and high inflation. Growth in government spending reached 8.3 per cent, up from 3.8 per cent in the previous quarter. The GDP expansion was also propped up by rural and festival season spending.“There are some short-term factors which are driving growth up,” said Dhiraj Nim, India economist at ANZ Research in Mumbai, adding that policy support would be needed on a “sustained basis” to further shore up the economy.The Reserve Bank of India under new central bank governor Sanjay Malhotra this month lowered headline borrowing costs for the first time in five years to support growth, cutting the benchmark repo rate 0.25 percentage points to 6.25 per cent.The rupee has also come under sustained pressure and Malhotra has cautioned that India faces heightened external risks since US President Donald Trump came to office.Modi’s recent trip to Washington to meet the president was partly seen as an attempt to cement India’s growing ties with the US, but also to prevent punishing reciprocal tariff barriers on exports, including medicine and textiles. More