Overall, February 2025 presented challenges for the U.S. economy, including contracting GDP projections, declining housing starts, and reduced manufacturing activity. Additionally, rising inflation and decreasing mortgage applications reflect a complex economic environment influenced by policy uncertainties and global trade dynamics.
The U.S. Bureau of Economic Analysis (BEA) released its second estimate for the fourth quarter (Q4) of 2024, confirming that real Gross Domestic Product (GDP) grew at an annual rate of 2.3%. This figure aligns with the initial estimate and reflects a deceleration from the 3.1% growth observed in the third quarter.
Economic forecasts for the rest of 2025 are mixed, with scenarios ranging from sustained growth to potential stagflation. President Donald Trump’s announcement of new tariffs—25% on imports from Mexico and Canada, and an additional 10% on existing tariffs for China—has introduced uncertainty in trade relations and recent data indicates a softening job market, with initial jobless claims reaching a three-month high. We have also seen a heightened goal of reducing government spending with the DOGE team now in month 2 of action.
January 2025 saw a -9.8% month-over-month decline in housing starts, decreasing to an annualized rate of 1.366 million from December’s 1.515 million. This downturn indicates a slowdown in residential construction activity.
The manufacturing sector experienced a decline in new orders and employment in February. The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) fell to 50.3 from January’s 50.9, remaining just above the contraction threshold. This decline is attributed to uncertainties surrounding impending tariffs on imports from Canada, Mexico, and China, leading to longer material delivery times and increased factory gate prices.
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