### Will a “Trumpcession” Occur? Atlanta Fed Model Shows Negative GDP Growth, But Experts Urge Caution
The Atlanta Federal Reserve’s latest GDP model predicts a 2.8% contraction in the first quarter of 2025, sparking a wave of alarming headlines. Reuters described it as a “Trumpcession” warning, Barron’s highlighted another drop in the Atlanta Fed’s GDPNow estimate, and Forbes pointed to increasing recession risks based on multiple indicators.
Meanwhile, economic concerns extend beyond GDP forecasts. The University of Michigan’s Survey of Consumers reported a decline in consumer sentiment to 64.7 in February 2025, a 10% drop from the previous month, citing inflation and tariff concerns. Additionally, the Bureau of Economic Analysis noted a slight decline in consumer spending, down 0.2% in January.
### A Call for Perspective
Despite the negative economic indicators, Marcus & Millichap Senior Vice President John Chang urged a more measured response in a recent video discussion, “Is the Economy Slowing?” He acknowledged the concerning data but emphasized that deeper analysis provides a more nuanced picture.
### Consumer Sentiment and Political Bias
Chang pointed out that consumer sentiment data often reflects political biases. He noted that while Democratic respondents reported a 30-percentage-point decline in confidence about the government’s performance, sentiments among Independents remained largely unchanged, and Republicans actually showed a 24% increase in optimism. Given the partisan divide, Chang suggested the overall impact on rental housing and consumer behavior may be muted, as shifts in sentiment largely balance out.
### The Impact of Trade and Tariffs
Trade uncertainty is another key factor affecting GDP. The Trump administration’s fluctuating stance on tariffs has created confusion among businesses and investors. Chang explained that companies relying on imports rushed to stock up before tariffs took effect, which negatively impacted net exports. This likely contributed to the Q1 GDP decline. However, he expects fewer imports in Q2, which could mitigate some of the negative effects on overall economic growth.
### Looking Ahead
Chang remains optimistic about economic recovery, predicting growth will return to positive territory in Q2 2025, potentially rebounding around 4%. In the longer term—spanning five to seven years—he believes the current economic and political shifts will have little lasting impact on commercial real estate performance.
While concerns about a potential “Trumpcession” are understandable, experts urge caution in overreacting to short-term data. The economy’s resilience, combined with expected adjustments in trade patterns and political cycles, could ultimately stabilize growth.
