Core Viewpoint - The article highlights a concerning GDP forecast from the Atlanta Federal Reserve, predicting a contraction of 2.825% for the first quarter of 2025, marking the first negative growth for the U.S. economy since the COVID-19 pandemic [1][5]. Economic Forecast - The Atlanta Fed's GDPNow model has significantly downgraded its forecast for Q1 2025, from a previous estimate of a 2.33% growth to a contraction of 2.825% [6]. - This prediction is the worst since the second quarter of 2020, when GDP shrank by 7.5% [6]. - The model's downgrade is attributed to an increase in the U.S. trade deficit, which reached a record -$153 billion in January, exceeding market expectations of -$116 billion [7]. Market Reaction - U.S. stock indices opened lower, with the Dow Jones down 0.96%, Nasdaq down 1.19%, and S&P 500 down 1.01% [2]. - European markets also experienced declines, with Germany's DAX index falling nearly 3%, France's CAC40 down nearly 2%, and the UK's FTSE 100 down nearly 1% [3]. Data Analysis - The GDPNow model's latest forecast reflects a significant shift in economic outlook, with personal consumption expenditure (PCE) and private fixed investment growth predictions dropping to 0.0% and 0.1%, respectively [7]. - The ISM manufacturing index also showed a decline from 50.9 to 50.3, contributing to the negative GDP forecast [7]. Government Response - U.S. government officials are reportedly anxious about the economic implications of a potential contraction, particularly concerning the reputation of the current administration [9]. - The Secretary of Commerce suggested a reevaluation of the indicators used to determine economic recession, indicating a potential change in how government spending is accounted for in GDP reports [10].