The Economic Data Is as Cloudy as the Outlook
Volatile numbers in the months ahead will keep investors guessing on the direction of the economy.
Balancing act.
Photographer: Alex Kraus/Bloomberg
The US economy looks set to disappoint this quarter. A number of economists have lowered their forecast for growth in real gross domestic product due to a widening trade deficit and sluggish consumer spending. An uncertain trade war and tepid labor demand have also clouded the outlook for the rest of 2025. Conflating the two would be a mistake, though.
Much of the first quarter’s weakness is a one-off, and the economy should do substantially better in the subsequent three months. That won’t mean we’re out of the woods. It’s in the second half that recessionary risks will really come to the fore as the White House’s trade policies play out, and the Federal Reserve keeps up its guard against inflation. Expect plenty of market volatility along the way.