A survey of 14 economists’ forecasts by CNBC suggests that GDP growth in the just-ended first quarter of 2025 would be only 0.3%, a huge slowdown from the end of 2024. The participants also thought that Core PCE inflation, the metric favored over CPI by the Federal Reserve, would stay around 2.9% for the rest of the year.
The forecasts come after falling consumer and business sentiment and weakening consumer spending, which represents 69% of GDP. Last Friday, the Bureau of Economic Analysis said that real consumer spending was up 0.1% in February after -0.6% in January.
Even worse, the GDPNow site of the Federal Reserve Bank of Atlanta, which attempts to be a running estimate of real GDP growth (adjusting for inflation), suggested that as of April 1, GDP was falling at a -3.7% rate.
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It’s important to keep these numbers in perspective. A survey of 14 economists is a small sample and GDPNow provides a mathematical model using current data without human analysis or perspective.
The administration’s tariff plans had been adding financial pressure to all markets, including CRE, with many economists arguing that companies will pass along at least some portion of the increased costs of imported products, assemblies, components, and materials to consumers and businesses. The result could be inflationary.
Yesterday, President Donald Trump announced additional tariffs beyond the ones already planned to target Mexico, Canada, and China — the three largest trading partners of the U.S. Now, a new 10% tariff would apply to almost all imports. Additional “reciprocal” tariffs would be applied to goods for many of the country’s biggest trading partners. The tax on goods from China will rise to more than 54%. The EU will face total tariffs as high as 20%, while Japan will see a 24% rate.
GlobalData.TSLombard estimated that the new round of tariffs will be worth $530 billion and effectively impose a “1.8% tax on GDP, an 8.4% tax on consumer goods spending, an 18% tax on manufacturing, and a 77% tax on manufacturers’ profits.” They called it a “recession-producing turn—if these tariffs stay in place.”
Meanwhile, Fitch Ratings has cut its 2025 growth forecast for the U.S. to 1.7% from 2.1% in the December 2024 Global Economic Outlook and its 2026 forecast to 1.5% from 1.7%. "These rates are well below trend and down from almost 3% annual growth in 2023 and 2024," it said.
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