Photo credit: www.investopedia.com

Economic Growth Projection: Q1 2024

Key Takeaways

The anticipated growth of the U.S. GDP for the first quarter is projected to be a mere 0.3% annually, a notable decline from the 2.4% growth seen in the previous quarter. If confirmed, this slowdown may be tied to a spike in imports, as consumers hurried to purchase goods before the implementation of President Donald Trump’s tariffs, which negatively impact GDP growth.

The influence of President Trump’s tariffs on economic data has been gradual, but a shift is expected with the upcoming GDP report, which may reveal significant effects on the nation’s economic output.

According to a consensus forecast from a survey conducted by the Wall Street Journal and Dow Jones Newswires, the GDP is projected to rise at an annual rate of 0.4% for the first quarter. This marks a decline from 2.4% in the last quarter of 2024, representing the slowest growth rate since 2022. Economists suggest that the pronounced decrease in growth will likely reflect a surge in imports, as consumers sought to stock up on foreign goods prior to the new tariffs taking effect.

Some analysts anticipate an even sharper decline than the median forecast, predicting that the economy may contract for the first time since 2022. The Federal Reserve Bank of Atlanta’s GDP Now tool indicates an estimated contraction of 2.5% on an annualized basis for the first quarter. This GDP report could serve as one of the first concrete indicators demonstrating the economic repercussions of the tariffs instituted by the Trump administration, which commenced in February and intensified in April. While there has been a shift in sentiment among businesses and consumers regarding economic outlooks, key indicators such as unemployment and inflation have remained relatively stable to date.

Source
www.investopedia.com