The post Economic Forecast Update, May 2025: A Short Rocky Road appeared on BitcoinEthereumNews.com.

Historical data from Bureau of Economic Analysis; forecast from Dr. Bill Conerly Dr. Bill Conerly The economy contracted by 0.3% in the first quarter, according to the official report on Gross Domestic Product. Widespread worry about consumers and businesses postponing purchases and hiring decisions has led economists to raise their estimated risk of recession, the Wall Street Journal reported in April. Yet the economic outlook is not bad if decisions on tariffs are concluded this summer. That’s true even if the tariffs end up significantly above last year’s rates. The key elements of the economic forecast include the solid growth we achieved in 2024, which provided a good foundation for this year. Most policy changes other than tariffs will have small impacts on the short-run economic forecast, some positive and some negative but the sum total very small. And the Federal Reserve has good plans for tariff-induced price hikes. The U.S. economy simply needs to get through the tariff uncertainty without major damage. GDP Decline In Q1 The GDP report does not mark the start of a recession, in all probability. The first GDP report is labeled “Advance Estimate,” which the Bureau of Economic Analysis says is “based on source data that are incomplete or subject to further revision.” The average revision, ignoring whether it’s upward or downward, is 0.7%. Thus, the -.3% Advance Estimate may well be revised significantly. The details of the report do suggest revisions. Imports rose significantly in Q1, as people and businesses bought in anticipation of tariffs. This data is pretty accurate by a month after the end of the quarter, when the Advance Estimate is released. Imports are subtracted in the GDP calculation, to remove them from figures for spending as well as inventory increases. But inventory increases are not so accurate, and with…

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Filed under: News - @ May 6, 2025 12:27 pm