US economic activity is on track to maintain a moderate growth rate in 2025’s first quarter, according to the median for several nowcasts compiled by CapitalSpectator.com. Today’s initial Q1 estimate projects that the 2%-plus pace reported for Q4 by the Bureau of Economic Analysis (BEA) will continue in the current quarter.
Output appears set to rise 2.3% (annualized real rate), according to the median nowcast. If correct, growth will match Q4’s advance.
The standard caveat applies to this early in the quarter for the simple reason that a lot can change between today and April 30, when BEA publishes its initial estimate of the official GDP data. In addition to the usual uncertainty that surrounds yet-to-be-published numbers that will influence the Q1 GDP report, there’s an extra layer of ambiguity related to various policy changes prioritized by President Trump.
For example, some analysts advise that a higher degree of inflation risk lurks in the near term due to plans to raise tariffs. The risk arrives at a potentially vulnerable point when inflation metrics published to date continue to reflect so-called sticky inflation. Last week, the government reported that consumer inflation continued to accelerate, rising 3.0% in January vs. the year-ago level — the highest since last June.
One implication: the Federal Reserve is unlikely to extend rate cuts in the near term and, depending on incoming inflation data, may be forced to raise rates. There’s also a possibility that a stronger inflation headwind will slow economic activity.
For the moment, however, the US economy still looks relatively resilient, as today’s Q1 GDP forecast suggests. But with US economic policy in a state of flux on several fronts, there’s room for debate about the implications for growth.
A useful benchmark to monitor for assessing how expectations change is the median GDP nowcast updated on these pages. The first question: Will today’s moderate growth estimate for Q1 hold steady through the next round of data updates over the next several weeks?