The Atlanta Federal Reserve’s model predicts GDP could shrink by 2.8% in Q1 2025. Perhaps unsurprisingly, headlines pounced on the news. Reuters claimed that “Atlanta Fed Shock Sounds ‘Trumpcession’ warning, while Barron’s noted that “Atlanta Fed’s GDPNow Estimate Falls Again.” Forbes added its alarm, pointing out that “2025 Recession Risk is Increasing According to Multiple Indicators.”

Meanwhile, according to the University of Michigan’s Survey of Consumers, inflation and tariff worries put consumer sentiment at 64.7 in February 2025 (down 10% from the month before). The Bureau of Economic Analysis also reported that consumer spending fell by -0.2% in January 2025.

But Marcus & Millichap Senior Vice President John Chang suggested that everyone take a deep breath and relax om the recently released video, “Is the Economy Slowing?” On the one hand, Chang said that there’s “a whole bunch of economic news on the surface. On the other hand, “Each of those readings also has a story to tell that takes some of the heat off the data points,” he commented.

What the Consumer is Thinking

Chang indicated that the consumer sentiment data has a political bias, with part of the survey asking if respondents felt the government was doing a good job. “Digging deeper, the percentage of Democrats who think the government was doing a good job fell 30 percentage points,” he said. Meanwhile, the opinions of Independents barely moved, and the opinion of Republicans who think the government is doing a good job increased by 24%.”

In other words, consumer sentiment is based on party lines. While the numbers could impact rental housing and spending behavior, “when you consider that the politics in our country are split pretty evenly, the net impact will probably be close to neutral. Half the people are less happy, and half the people are more happy now,” Chang observed.

Imports, Exports and Tariffs

Trade is also part of GDP growth (or lack thereof). And as anyone who has read the news lately knows, the Trump administration’s back-and-forth stance on tariffs confuses the stock market, investors and businesses. “If you’re a company that relies on imports, you have to take the risk of tariffs very seriously,” Chang said.

Because of this, it shouldn’t be a surprise that manufacturers and retailers bought as many imports as possible before the tariffs hit. Those tariffs also hit another GDP data point, net exports. Net exports are the total amount of U.S. exports minus imports. Because of business’ buying sprees, the net exports figure “looks like it’s going to run pretty negative for the first quarter,” Chang said. However, in Q2 2025, businesses will likely import less, meaning that the negative net import balance shouldn’t bring the GDP down as much.

What it Means

Chang anticipates that economic growth will likely move into positive territory in Q2, “rebounding somewhere in the 4% range.” And taking the longer view, from five to seven years, “the choppiness of this political and economic transition probably won’t have much bearing on commercial real estate returns,” he added.