The Atlanta Fed’s GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2025 was 3.8 percent on June 9 based on real data. That is strong growth which covers the first half of 2025.
This contrasts with the World Bank’s forecast.
World Bank Sees U.S. Growth Rate Halving as Tariffs Slow Global Economy
Slowdown in U.S. and global economies could be more severe if tariffs rise from levels in effect in May, bank says
By Paul Hannon, The Wall Street Journal, Updated June 10, 2025
Key Points
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World Bank expects US economic growth to halve to 1.4% in 2025 due to President Trump’s tariff policies.
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Global economic growth is projected to slow to 2.3% this year and 2.4% the next, due to the rise in duties.
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The World Bank warns further tariff increases could severely impact global growth, especially for developing economies. …
Should duties on imports rise by a further 10 percentage points, global economic growth would be just 1.8% this year and 2% in 2026, the World Bank’s economists estimated.
“This sudden escalation in trade barriers results in global trade seizing up in the second half of this year and is accompanied by a widespread collapse in confidence, surging uncertainty, and turmoil in financial markets,” the World Bank said of such a scenario… [end quote]
Yesterday, Morningstar’s Dave Sekera warned that the stock market is “in the eye of the hurricane” on “The Morning Filter with Susan Dziubinski and Dave Sekera” video.
(https://www.youtube.com/playlist?list=PLdHNrgBvsSFTJVtTdMVTB6u1I2VqZQIid)
He was referring to the stock market’s rapid recovery since President Trump’s “Freedom Day” shock even though tariffs will be imposed sometime in July. He expects a drawdown in late 2025.
The options market is predicting a 60% chance of a fed funds rate cut in September 2025. This may be traders’ wishful thinking (they habitually front-run the Federal Reserve). Or it may be an accurate prediction of the Fed responding to higher unemployment.
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
Wendy