
US Economy faces tough road ahead with slow growth and stagflation amid tariffs and uncertainty
US Economy Faces Tough Road Ahead with Slow Growth and Stubborn Inflation Amid Tariffs and Uncertainty
The US economy's outlook indicates a stagflationary trend, as per the latest CNBC Rapid Update. Policy uncertainty, new tariffs, and declining consumer and business confidence will lead to a slowdown in the GDP growth of the United States, reported CNBC.
Sluggish First-Quarter GDP Growth Forecasted
GDP growth is anticipated to be 0.3% in the first quarter of 2025, as per the average forecasts of 14 economists for GDP and inflation, reported CNBC. This would be a fall from the 2.3% GDP growth reported in the last quarter of 2024 and would also be the lowest growth rate since 2022 when the economy was recovering from the pandemic, according to CNBC.
Inflation Creates Challenges
The core Personal Consumption Expenditures inflation is expected to remain at about 2.9% for most of the year before resuming its decline in the fourth quarter, according to the CNBC survey. economists anticipate that the Core PCE will increase to 3% next quarter and stay roughly at that level until it drops to 2.6% a year from now, reported CNBC. «Stubborn inflation will complicate the Fed’s ability to respond to flagging growth,» according to CNBC.
Weak Consumer Spending
One of the key drivers for the poor growth is a weakening in real consumer expenditure, as per the report. Consumer spending in February, adjusted for inflation, increased 0.1%, after a 0.6% decline in January, reported CNBC. Action Economics, revised its forecast for the growth in spending lower to 0.2% for this quarter from 4% during the fourth quarter of 2024, reported CNBC.
Live Events
Barclays claimed that “Signs of slowing in hard activity data are becoming more
