New Fed Forecast Calls for Negative GDP Growth in Trump and Musk’s Economy

By Jacob Weindling  |  February 28, 2025 | 3:49pm
Photo by The White House
Economy Recession
New Fed Forecast Calls for Negative GDP Growth in Trump and Musk’s Economy

As Splinter’s resident Cassandra, I must admit to some satisfaction at seeing my many prophecies of doom which began the day after the election having some level of justification to them. To be clear, this satisfaction is not happiness, I do aim to use my finance degree for good, after all. I just feel like the guy at the end of Act I of a disaster movie who feels like they did everything they could to warn folks of the world-historic calamity now beginning to envelop us all. I graduated into a job market which began 2009 losing 800,000 jobs per month, and my heart breaks to think that younger generations may have to go through that again after experiencing the extreme alienation of the 2020 crash. Economic crises do untold damage to the entire world, and they destroy millions of people’s lives. There’s a good reason why voters say they prioritize the economy in every election, and it’s because they want to avoid what the Atlanta Federal Reserve is now projecting for this quarter. Their GDPNow forecast fell off a cliff, mainly due to tariff-based adjustments, per the Atlanta Fed:

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2025 is -1.5 percent on February 28, down from 2.3 percent on February 19. After recent releases from the US Bureau of Economic Analysis and the US Census Bureau, the nowcast of the contribution of net exports to first-quarter real GDP growth fell from -0.41 percentage points to -3.70 percentage points while the nowcast of first-quarter real personal consumption expenditures growth fell from 2.3 percent to 1.3 percent.

This is not a guarantee, Goldman Sachs still has their first quarter projection at 1.4 percent GDP growth (which is less than last year’s annual 2.3 percent GDP growth), but things are getting very real as Trump and Musk’s policies begin to hit home. I have covered how the returns on the yield curve have inverted at times since Trump’s trade war began, which is different from a full-blown yield curve inversion, the grim reaper warning us of an impending recession. But just yesterday, in the midst of a full-scale of collapse in yields spanning up to the 30-year Treasury Bond that is continuing today, yields on Treasury Notes that will expire within this Trump administration did invert.

Yield curve update: still falling with no bottom in sight, and the 1, 2 and 3 year Treasuries have officially inverted (a giant “recession ahead” sign raised by the bond market)

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— Jacob Weindling (in my Cassandra Era) (@jakeweindling.bsky.social) February 28, 2025 at 9:38 AM

This is all very bad. “Not good,” as Trump’s former National Economic Council Director Larry Kudlow said on Fox Business. Meanwhile, the actual acting president is having a normal one on the propaganda regime site trying to post through it.

Fun fact for apartheid South Africa’s preeminent ketamine enthusiast: unless you just flat out make the numbers up, taking government spending out of GDP will reduce GDP. No matter how badly the right-wing wants to pretend there is some sort of firewall between government’s hand in the economy and where privatization begins, fully formed adults understand that’s not how the real world works, and our economy is a lot more intertwined than the simpletons believe.

Trump and Musk will undoubtedly try to cook the economic books to their liking, but unlike the rest of their propaganda, they are up against earth’s most well-financed force of economic knowers. If the numbers coming out of the Bureau of Labor Statistics or any of the Fed branches look like they’re off, the numbers at places like Goldman Sachs will tell someone to dig into it, and Bloomberg or the Wall Street Journal will inevitably leak any news of distortions, which would likely to lead to a stock market pullback, one of the only ways to get Trump’s undivided attention. This is where the immense unchecked power of capitalism can actually be a check on these serial asshole liars destroying everything in sight. It’s one thing to lie to the braindead media members who are more than happy to act as Trump’s personal PR team to low information voters, but the people with trillions of dollars invested in the market are a whole different animal.

The illuminati are real, folks. I have become determined to make people care about the bond market because the lesson every ruler on earth has learned at some point is that the bond market really does run our debt-driven world. In this era where zero-interest rates destroyed the brains of countless people, market watchers became obsessed with what the Federal Reserve chairman says as a way to try to read the tea leaves of the economy, but starting in September, the bond market diverged from the Fed Funds Rate, and the Fed paused after cutting in December.

There are many reasons why the Fed is being more cautious and taking their time to try to cut interest rates, but looking at the charts, one becomes obvious: another 25-bps cut in the Fed Funds Rate would put it below where the bond market was before yields plummeted this past week. This is as visible a demonstration of the bond market’s power as you can find (another visible example is how Japan literally built the base of their economic model off U.S. Treasuries). If Elon Musk wants to go to war with the largest, most liquid market in the world, he will lose just like everyone else has who challenged the illuminati. If there is anything that we have learned in this superficial and corrupt world, you don’t fuck with this amount of money and just get away with it.

A recession feels like it is becoming more inevitable by the day, fueled by Trump’s trade war and Musk’s dismantling of the federal government. The April jobs report is guaran-damn-teed to be catastrophic since it will begin to capture Musk’s destruction, and if this new Atlanta Fed projection of negative 1.5 percent growth in the economy for the first three months of the year comes true, between the short end of the yield curve inverting and the inevitable sharp rise in the unemployment rate come April, it’s not hard to see how the second quarter of the year could spiral out of control.

 
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