Shocking result from closely observed US economic Weathervane Sounds 'Trumpzession' Warning

“Trumpzession.”

If you have never heard the term, you will now, like a closely observed economic Weathervane observe in real time, signal that GDP has been shrinking at the fastest pace since the pandemic closure.

The BDPNOW model of the Atlanta Fed for the annualized growth in the current quarter was a breathtaking -2.8% compared to +2.3% of the last week. A month ago, the model showed that growth in the January March period pursued almost 4.0%.

These estimates are published regularly because new economic data are published and can be quite volatile. In February alone there was 11th. The shock reading on Friday from -1.5% on Friday was conducted by a record $ 153 billion in January when the companies were present before the tariffs, and the decline on Monday was powered by soft manufacturing activities.

There is every chance -2.8% in a positive reading in a few weeks.

The number of Atlanta Fed is initially an outlier. The equivalent NOWCAST-EXPEIT-TITE-TIME MODEL of the New York FED was updated on Friday to +2.9% in annual growth in the first quarter of +3.0%. And the “weekly economic index” of the Dallas Fed, which does not contain the latest data, showed on February 27 +2.4%.

But the real -time estimates of Atlanta Fed are historically the most reliable of these models, and the negative numbers did not come out of nowhere. Many soft economic indicators such as mood surveys have been extremely weak in the past few weeks, and some hard economic indicators also flash red.

The consumer mood in January was the most in three and a half years, the retail turnover dropped in almost two years, the real editions have dropped since the beginning of 2021, and the retail giant Walmart warned of a difficult year. It may be no surprise that Citis US surprise index has been taken to a negative area and has reached the lowest point since September.

A common thread that goes through all of this is the great degree of uncertainty created by the agenda by US President Donald Trump: trade protectionism, especially tariffs; His obvious growing closeness to Russia and distance from traditional allies such as Europe; And the Doge (Department of Government Efficiency), which is brought to federal expenditure and employment.

The markets certainly signal that problems could occur. The Nasdaq has lost up to 9% in 10 days, with Big Tech fell even more. Investors are looking for the security of the US state bonds: The two-year return on Friday has dropped under 4.00% for the first time since October, and the 10-year return has overthrew 60 BPs since mid-January.

These movements could be important for the real economy due to the “prosperity effect”. As Mark Zandi from Moody recently stated, the top 10% of American households now make up around half of all consumer expenses. This is a record. They also have a lot of stocks, and when the Wall Street drives south, they will rather tighten their belts.

Economist Phil Suttle said that this year he was expecting Trump's agenda burdening the economy, but not expecting that it has such an apparently negative influence so quickly. If the “stump and chaotic” implementation of Trump's expenditure and trade policy achieves growth more than an imaginary hit, the Federal Reserve can lower interest in the second quarter, reports Suttle.

The cycle of the FED is initially on ice, especially due to the uncertainty in relation to Trump's commercial and budgetary policy. But an upcoming “Trumpzession” was probably not into the meaning of the political decision -makers when they pressed the break. It is probably now.

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