US GDP may shrink 2.8% in Q1 amid economic uncertainty

The Federal Reserve Bank of Atlanta's GDPNow model has forecast a significant contraction in the U.S. economy for the first quarter of 2025, predicting a GDP decline of 2.8%.

This marks a substantial shift from earlier projections, which had anticipated growth of around 4% just a month ago.

The forecast suggests that the U.S. could experience its largest GDP contraction since the COVID-19 lockdown, potentially signaling the start of a recession.

Economic indicators such as a record-high $153 billion trade deficit in January and a sharp decline in consumer confidence have contributed to this downward trend.

President Donald Trump's tariff policies have been cited as a factor in the economic slowdown, with some analysts referring to the situation as a "Trumpcession."

The tariffs have led to a surge in imports ahead of their implementation, exacerbating the trade deficit.

The economic uncertainty has also impacted the cryptocurrency market, with Bitcoin (CRYPTO:BTC) and Ether (CRYPTO:ETH) experiencing significant declines over the past two weeks.

Despite Trump's efforts to promote the U.S. as a crypto hub, the total crypto market cap has dropped by over $670 billion since his inauguration.

Not all economic forecasts are as pessimistic; the Federal Reserve Bank of New York and Dallas have predicted growth rates of 2.9% and 2.4%, respectively, highlighting the variability in economic projections.