--- title: "The US Economic Outlook Is Horrifying: GDP Growth Expected to Hit a Five-Year Low—Is It All Trump’s Fault?" slug: the-us-economic-outlook-is-horrifying-gdp-growth-expected-to-hit-a-five-year-low-is-it-all-trumps-fault date: 2025-03-04 modified: 2026-04-07 author: Prajwal Khairnar excerpt: "" meta_description: "\"Trumpcession\" Warning from the Atlanta Fed Cailian News Service reported on March 4 that the GDPNow model, released in real time by the Federal Reserve Bank of Atlanta, has sounded" focus_keyword: US Economic Outlook Is Horrifying canonical_url: "https://blog.pickmytrade.trade/the-us-economic-outlook-is-horrifying-gdp-growth-expected-to-hit-a-five-year-low-is-it-all-trumps-fault/" og_title: "The US Economic Outlook Is Horrifying: GDP Growth Expected to Hit a Five-Year Low—Is It All Trump’s Fault?" og_description: "\"Trumpcession\" Warning from the Atlanta Fed Cailian News Service reported on March 4 that the GDPNow model, released in real time by the Federal Reserve Bank of Atlanta, has sounded" og_image: "https://blog.pickmytrade.trade/wp-content/uploads/2025/03/img-srchttpsyourwebsite.comwp-contentuploadsyour-image.jpg-altDeepSeek-AI-Impact-width100-h2Experience-the-New-Miaoxiang-Investment-Research-Assistant-Nowh2-1024x585.png" schema_type: Article categories: - Trading tags: [] reading_time: 3 word_count: 786 robots: "index, follow" lang: en-US --- # The US Economic Outlook Is Horrifying: GDP Growth Expected to Hit a Five-Year Low—Is It All Trump’s Fault? ### **“Trumpcession” Warning from the Atlanta Fed** Cailian News Service reported on **March 4** that the **GDPNow model**, released in real time by the Federal Reserve Bank of Atlanta, has sounded the alarm for what some are calling a **“Trumpcession.”** The model predicts that the US GDP growth rate will fall to its lowest level since the **COVID-19 pandemic** began in early 2020. Last Friday, the model **slashed its forecast** for annualized GDP growth in the current quarter to a shocking **-1.5%**, causing an uproar in the markets. If this forecast holds, it will mark the first contraction in the US economy since **Q1 2022**. However, just over the weekend, the projection worsened even further—by Monday, it had **dropped to -2.8%.** It’s worth noting that **just a month ago**, the same model predicted annualized US growth of nearly **4%**. Even as recently as last Monday, the forecast stood at **+2.3%**. So, what caused such a dramatic collapse in economic expectations within just two working days? --- ## **Is It All Trump’s Fault?** The Atlanta Fed’s **GDPNow model** constantly updates its forecast based on the latest economic data, so fluctuations are normal. However, the sheer scale of the recent downward revisions has stunned analysts. ### **Key Factors Behind the Sudden Downturn** 1. **Record-Breaking Trade Deficit** - Last Friday, the US trade deficit for January was reported at a **record-high $153 billion**. - Economists speculate that businesses **rushed to import goods** before Trump’s **new tariffs** take effect, artificially inflating imports and worsening the deficit. 2. **Weak US Manufacturing Activity** - Monday’s **ISM Manufacturing Index** fell from **50.9 to 50.3**, signaling sluggish factory activity. - The **Institute for Supply Management (ISM)** reported that raw material delivery times have increased, likely due to **tariffs disrupting supply chains**. - Prices at US factories **jumped to a near three-year high**, reflecting higher costs. ### **Economists Weigh In** James Knightley, **Chief International Economist at ING**, believes **trade uncertainty** is a major culprit behind the slowdown: > _“Trump’s trade policies aim to boost revenue through tariffs and encourage manufacturing reshoring. However, uncertainty about whether and when tariffs will take effect has left US manufacturers hesitant. As a result, trade activity is likely to remain weak until there is more clarity.”_ --- ## **The US Economy Has Been Flashing Warning Signs** The GDPNow model’s **sudden collapse** didn’t come out of nowhere. Many key economic indicators had already been **flashing red** for weeks: - **Consumer Confidence**: Plummeted in January, recording its biggest drop in **3.5 years**. - **Retail Sales**: Saw the steepest decline in nearly **two years**. - **Household Spending**: Fell at its fastest rate since early 2021. - **Stock Market Slump**: The **Nasdaq has dropped 9%** in just 10 days, with **big tech stocks** hit hardest. Even retail giants like **Walmart** have warned of a **challenging year ahead**. Meanwhile, **Citigroup’s US Economic Surprise Index** fell into **negative territory**, hitting its lowest level since **September 2023**. And the common thread running through all these issues? **Donald Trump’s economic policies.** - **Tariffs & Trade Wars** → Higher costs, weaker manufacturing. - **Federal Spending Cuts** → Less stimulus, fewer government jobs. - **Market Uncertainty** → Investors and businesses hesitate to spend. ### **Investor Reaction: A Flight to Safety** The **weakening economy** has already triggered major **market shifts**: - Investors are **rushing into US Treasuries**, signaling a lack of confidence in the economy. - The **2-year Treasury yield** fell below **4.00%** for the first time since October. - The **10-year Treasury yield** has dropped **60 basis points** since mid-January. As economist **Mark Zandi (Moody’s)** pointed out: > _“The wealthiest 10% of Americans now account for **half** of all consumer spending. If the stock market weakens further, high-income consumers may pull back—creating a vicious cycle that slows the economy even more.”_ --- ## **Will the Fed Cut Interest Rates Sooner Than Expected?** Economist **Phil Suttle** admits he expected Trump’s policies to **pressure the economy** this year but was surprised at how quickly the damage is unfolding: > _“If Trump’s aggressive fiscal and trade policies hit US growth harder than anticipated, the Fed may be forced to cut rates as soon as Q2.”_ ### **Could the Fed Hit the Panic Button?** For now, the **Federal Reserve** has paused its rate-cutting plans, given that **inflation has slowed** only modestly. However, if this “Trumpcession” continues to accelerate, they may have no choice but to **intervene sooner than expected**. --- ### **Final Thoughts: The Road Ahead** - **If tariffs remain in place** and **manufacturing weakness deepens**, expect more downward revisions in **growth forecasts**. - **If stock markets continue to fall**, wealthy consumers may **cut back spending**, worsening the slowdown. - **If economic uncertainty lingers**, the Fed could **step in with rate cuts**, but that alone may not be enough to counteract **Trump’s economic policies.** With GDP forecasts crumbling and economic warning signs flashing, one thing is certain—**the US economy is heading into turbulent waters.** For AI tools & developers:[View Markdown →](https://blog.pickmytrade.trade/the-us-economic-outlook-is-horrifying-gdp-growth-expected-to-hit-a-five-year-low-is-it-all-trumps-fault.md)