FOR HOME OFFICE AND ADVISOR USE ONLY.
Figure 2 shows a five-year history of US unemployment and inflation, along with the Federal Reserve's 2% target inflation
rate and the estimated natural unemployment rate of 4%. (The natural unemployment rate is the level believed to neither
push interest rates up or down.)
Feb-20 Aug-20 Feb-21 Aug-21 Feb-22 Aug-22 Feb-23 Aug-23 Feb-24 Aug-24 Feb-25
0%
2%
4%
6%
8%
10%
12%
14%
16%
Inflation Rate Unemployment Rate Target Inflation Rate Natural Unemployment Rate
Inflation and Unemployment
Source: Data from YCharts. As of March 13th, 2025.
Gross Domestic Product (GDP)
There's no sign of an imminent recession, but economic growth may slow in the near-term. The Federal Reserve Bank of
Atlanta issued a -2.8% Q1 GDPNow estimate on March 3rd that has been in the news, but it's a rather flawed forecast at
the moment. The Atlanta Fed's most recent GDPNow estimate was -2.4%
2
. The Atlanta Fed's model assumes that the pre-
tariff rush of imports into the US will continue throughout Q1. That is not currently expected by economists. (Recall that
imports reduce GDP.) While it's possible that Q1 GDP growth is negative, the economists polled by Bloomberg expect 2.1%
growth rate
3
. Consumer spending hasn't crashed nor has business investment, based on current indicators. Figure 3 shows
historical US GDP, accounting for inflation.
7.4%
-1.0%
0.3%
2.7%
3.4%
2.8%
2.4%
3.2%
1.6%
3.0%
3.1%
2.3%
4.4%
Dec-21 Jun-22 Dec-22 Jun-23 Dec-23 Jun-24 Dec-24
Real US GDP
Source: Real quarter-over-quarter GDP data from YCharts. As of March 13th, 2025.
0
20
40
60
80
2 As of March 6th, 2025.
3 As of March 14th, 2025.
20250318-4330183
