GDP growth in the first quarter will only be 0.3% as Stagflation Conditions Stagflation prices, explains CNBC Survey

Political uncertainty and new radical prices of the Trump administration combine to create a stagflationist perspective for the American economy in the last rapid CNBC update.

The rapid update, on average forecasts of 14 economists for GDP and inflation, sees the growth of the first quarter registering a 0.3% anemic compared to the 2.3% reported in the fourth quarter of 2024. It would be the lowest growth since 2022 as the economy emerged from the Pandemic.

The basic inflation of the PCE, on the other hand, the preferred inflation indicator of the Fed, will remain stuck at around 2.9% during most of the year before resuming its decline in the fourth quarter.

Behind the forecasts of the GDP of the ADP, there are new evidence that the decline in the feeling of consumers and businesses appear in a real economic activity. On Friday, the Commerce Department indicated that actual consumption expenses or adjusted to inflation in February increased by 0.1%, after a drop of -0.6% in January. Action Economics has lowered its prospects for growth spending only 0.2% at this quarter, compared to 4% in the fourth quarter.

“The signs of slowing down hard activity data become more convincing, after an earlier worsening in the feeling,” wrote Barclays during the weekend.

Another factor: a wave of imports (which subtracts from GDP) which seem to have flocked to the United States before the prices.

The good news is that the import effect should decrease and only two of the 12 economists questioned see negative growth in the first quarter. No provides consecutive districts of economic contraction. Oxford Economics, which has the lowest estimate of the first quarter at -1.6%, provides for continuous import trail of imports but sees the rebound in GDP in the second quarter to 1.9%, because these imports will eventually stimulate growth when they are counted in inventory or sales measures.

On average, most economists provide for a progressive rebound, GDP in the second quarter, an average of 1.4%, in the third quarter to 1.6%and the last quarter of the year going to 2%.

Danger is an economy with anemic growth of only 0.3% could easily slip into negative territory. And, with new prices to come this week, not everyone is so sure of a rebound.

“Although our reference base does not show a decrease in real GDP, given the World Trade War and the Dogeous Cups to Jobs and Financing, there is a good chance that GDP will decrease in the first and even the second quarters of this year,” said Mark Zandi of Moody’s Analytics. “And a recession will be likely if the president does not start to go back to the prices in the third quarter.”

Moody’s is looking for anemic growth T1 of only 0.4% which bounces to 1.6% by the end of the year, which is still modestly lower than the trend.

Tenacious inflation will complicate Fed’s ability to respond to growth growth. The Core PCE is expected at 2.8% this quarter, going to 3% in the next quarter and remaining about this level until the decrease to 2.6% per year in a year.

While the market seems to bank on rate drops, the Fed could find them difficult to justify until inflation begins to drop more convincing at the end of the year.