Economic forecasts are slowing down in manufacturing

Economic uncertainty and data beyond expectations prompted significant revisions to the first quarter of 2025 forecasts. Yahoo Financial Report said recent releases showed a slowdown in the manufacturing sector and a significant decline in construction spending. The Atlanta Fed’s GDPNOW tool integrates current data into estimated quarterly economic growth, predicting GDP contraction of 2.8% in the first three months, a sharp drop from an early forecast of 1.5% decline.

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Data from the index box show that the ISM manufacturing index fell to 50.9 in January to 50.3, a broader environment, while the costs faced by businesses continue to rise. The price of the payment index soared to 62.4, marking the highest level since July 2022 and marking the company’s spending growth. Tariff policies, especially those proposed for Mexico and Canada, have contributed to this economic pressure and influenced corporate and consumer spending patterns.

In these developments, economic analysts have been adjusting their forecasts. For example, Bernard Yaros of Oxford Economics adjusted his GDP forecast to QDP forecast, from 1% last week to 1%. This is significantly lower than the expected 2.5% in the February baseline forecast. Similarly, JPMorgan revised its GDP forecast to 1.5%, down from 2.25%, while Goldman Sachs adjusted its estimate to 1.6%, from the initial 2.6% in late January.

Nevertheless, as February’s work report approaches, confidence in the labor market remains. Economists forecast an increase of 160,000 jobs and the unemployment rate remains at 4%, suggesting that labor market conditions may not fully reflect the recession reflected in GDP forecasts.

Source: Index Box Market Intelligence Platform