The Atlanta Fed’s grim forecast signals economic peril. Is this the chaos of a desperate gambler—or just bad math?
Say what you will about Donald Trump—and the world has hardly run short of adjectives—he has a knack for turning the mundane into the operatic. The latest act in this peculiar drama is an economic one, and it arrives with a phrase so freshly minted it might still smell of ink: “Trumpcession.” If you haven’t heard the term before, you will now, as a closely watched real-time U.S. economic weathervane—the Atlanta Fed’s GDPNow model—flashes a warning that GDP is shriveling at a pace unseen since the pandemic shuttered the globe. On Monday, its estimate for annualized growth in the current quarter plunged to a jaw-dropping -2.8%, down from a breezy +2.3% just a week prior. Rewind a month, and the same model had January-to-March growth humming along at a robust +4.0%. Rarely has a spreadsheet managed such melodrama.
How did we get here? The proximate cause, it seems, is Trump’s trade policy—or rather, his fondness for tariffs so blunt they could double as sledgehammers. The GDP nosedive owes much to a record $153 billion trade deficit in January, as firms scrambled to stockpile imports ahead of the levies Trump has promised to slap on Canada, Mexico, and China. (A 25% tariff on the former two, 10% on the latter, set to kick in on March 20 if he doesn’t blink first.) Imports, in the arcane algebra of GDP, subtract from growth, and this frenzied hoarding has turned a statistical quirk into a neon sign of distress. Consumer sentiment, meanwhile, cratered in January by the most in three and a half years; retail sales slumped at their sharpest since early 2022. Walmart, that barometer of Middle American wallets, has already sounded a dirge for 2025. Yet here we are, barely discussing it, as if the economy were a tiresome guest at a dinner party better left ignored.
Perhaps we’re distracted by the man himself. Trump’s behavior—erratic, grandiose, a sort of vaudeville caricature of leadership—offers a clue. There’s a whiff of historical desperation about it, the kind that conjures images of Adolf Hitler in the 1930s, though one hesitates to overplay the parallel. Hitler, facing an economy gutted by reparations and depression, gambled on war to jolt Germany from its stupor. Trump, mercifully, isn’t invading Poland, though Greenland is not completely off the menu.
Leaving that aside, his tariff obsession carries a similar air of reckless improvisation. He’s betting that protectionism will revive American industry, never mind the economists who warn of slower growth, fewer jobs, and higher prices—stagflation’s unholy trinity. Target’s CEO has already braced customers for costlier avocados; small businesses, less able to absorb the hit, may simply fold. Morgan Stanley, not exactly a hotbed of radicalism, just slashed its U.S. growth forecast for 2025, citing—you guessed it—tariff concerns.
The Federal Reserve, caught in this whirlwind, looks on with furrowed brows. Its rate-cutting cycle, begun to tame inflation (down from a 2022 peak of 9% to a still-twitchy 3% in January), is now on ice, thanks to the uncertainty Trump has sown. Fed Chair Jerome Powell, ever the stoic, insists policy remains “restrictive,” yet financial conditions hint at something looser—hardly the clarity markets crave. If the Atlanta Fed’s -2.8% holds, whispers of a second-quarter rate cut grow louder. Call it a Hail Mary: Trump’s chaos might force the Fed to play savior, slashing rates to stave off a recession he precipitated. Irony, as ever, is the maestro of this score.
Why the silence, then? Perhaps it’s fatigue—Trump’s noise has dulled our senses. Or perhaps it’s disbelief: the U.S. economy, lauded for dodging pandemics and rate hikes, now stumbles under a self-inflicted wound? History offers no neat precedent, but it does suggest that leaders who treat economies like personal sandboxes rarely end well. Hitler’s wager collapsed in rubble; Trump’s may yet crumble in spreadsheets. For now, the Atlanta Fed’s warning blinks red, and we’d do well to stop pretending it’s just another squall.
