Key Takeaways
- The Atlanta Federal Reserve predicts the US economy will shrink by 2.8% in the first quarter of 2025.
- This is worse than their previous forecast of a 1.5% contraction.
- President Trump’s plans to cut federal jobs and impose tariffs on Mexico and Canada may worsen the economy.
- A bird flu outbreak is causing egg and poultry prices to rise.
The US economy could face a tough start in 2025, according to a new forecast from the Atlanta Federal Reserve. The Fed now says the economy may shrink by 2.8% in the first quarter of next year. This is a significant drop from their earlier prediction of just a 1.5% contraction.
Why Is the Economy Expected to Shrink? Several factors are contributing to this gloomy outlook. First, President Donald Trump is pushing to cut thousands of federal jobs. Reducing government jobs can lead to higher unemployment and slower economic growth.
Another concern is Trump’s threat to impose heavy tariffs on goods from Mexico and Canada. These two countries are America’s biggest trading partners. If tariffs are imposed, prices for imported goods could rise, making life more expensive for consumers.
Bird Flu Adds to the Pressure A severe outbreak of bird flu is also causing problems. The virus has hit farms across the US, leading to a shortage of eggs and poultry. As a result, prices for these staples have gone up, adding to the financial strain on families.
What’s Next for the Economy? The Atlanta Fed’s forecast paints a challenging picture for early 2025. With job cuts, trade tensions, and rising food prices, many are worried about the economy’s health. Time will tell if these projections come true, but one thing is clear: the next year could be tough for American households and businesses.
Stay tuned for more updates on this developing story.