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CNBC: Survey Predicts Zero Growth, Stagflation in First Quarter [1]

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Date: 2025-03-31

The soft numbers, such as surveys of consumer confidence , have dipped suddenly. Advance indicators of GDP growth, such as the GDPnow calculation from the Atlanta Fed, which tabulates GDP growth based on the best available data in advance of the official calculations after the quarter is over, are grim (see top chart).

Yet unemployment claims haven’t surged. And while business confidence has dipped a little, neither indicator is near a recession signal yet. The stock market is well down since February, but the stock market also values Tesla Inc. at 100+ times earnings, so I don’t put much predictive value in that.

Moreover, the GDPnow-cast now has an alternative calculation, that adjusts for unusual imports of gold in early 2025. Since that gold was probably intended as a store of wealth rather than for use in production, it makes sense that the official GDP figures will omit it.

Thus, economic forecasters seem to be homing in on a stagflation forecast — zero growth with higher prices — in early 2025. The Fed’s favorite inflation indicator, the price index for “core” personal consumption expenditures (PCE, excluding food and energy), rose by 0.4% in February over January 2025. Although monthly data bounces around, that tracks to a 4.8% annual rise (0.4 X 12), and it implies that much of the “nominal” (not price adjusted) economic activity increase in February was largely eaten up by price hikes.

Here’s a good article that explains the current emerging stagflation consensus from CNBC. Please give it a click for the whole story, which is a good summary I think.

First-quarter GDP growth will be just 0.3% as tariffs stoke stagflation conditions, says CNBC survey

Key Points Economic growth in the first quarter was just 0.3%, according to CNBC’s Rapid Update which tallied the forecasts of 14 economists.

The survey also shows Core PCE inflation will remain stuck at around 2.9% for most of the year.

The dour new forecasts come as the decline in consumer and business sentiment from the emerging trade war is showing up in real economic activity. Policy uncertainty and new sweeping tariffs from the Trump administration are combining to create a stagflationary outlook for the U.S. economy in the latest CNBC Rapid Update. The Rapid Update, averaging forecasts from 14 economists for GDP and inflation, sees first quarter growth registering an anemic 0.3% compared with the 2.3% reported in the fourth quarter of 2024. It would be the weakest growth since 2022 as the economy emerged from the pandemic. Core PCE inflation, meanwhile, the Fed’s preferred inflation indicator, will remain stuck at around 2.9% for most of the year before resuming its decline in the fourth quarter. Behind the dour GDP forecasts is new evidence that the decline in consumer and business sentiment is showing up in real economic activity. The Commerce Department on Friday reported that real, or inflation-adjusted consumer spending in February rose just 0.1%, after a decline of -0.6% in January. Action Economics dropped its outlook for spending growth to just 0.2% in this quarter from 4% in the fourth quarter.

Ultimately, I believe an economic and/or financial crisis will be the downfall of Trumpism in the U.S. I don’t hope for that former outcome at least, since I don’t hope for a recession and the suffering it would bring. But I think it’s fairly likely. These guys are morons.

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[1] Url: https://www.dailykos.com/stories/2025/3/31/2313612/-CNBC-Survey-Predicts-Zero-Growth-Stagflation-in-First-Quarter?pm_campaign=front_page&pm_source=trending&pm_medium=web

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