US Economy Slowdown Expected, Not Recession, Says Natixis Investment Managers

US Economic Outlook

• 📉 The US economy is expected to show a slowdown in GDP growth for the first quarter, with forecasts at 0.3%, a significant drop from 2.4% in the previous quarter.
• ⚠️ Consumer confidence is at a 5-year low, and business sentiment has declined, indicating a weakening economic environment.
• 💡 While a recession is not anticipated, the internal demand components (private investment and consumption) are projected to decline, contributing to the slowdown.
• 📌 The front-load effect of stockpiling ahead of tariffs is also expected to act as a drag on GDP growth.

Federal Reserve and Inflation

• 📊 The Fed's dual mandate of inflation and labor market strength means inflation data (like the PCE index) is crucial, especially with potential tariff impacts.
• 💼 However, the Fed is likely to prioritize the labor market situation when considering any policy actions, as current numbers do not suggest negative developments.
• 🚫 There is no immediate need for the Fed to rush into cutting interest rates.

European Economic Performance

• 🇩🇪 Germany has exited recession, with growth in the first quarter of 2025, but the growth rate is very weak.
• 🇪🇺 The overall European GDP growth was 0.4%, with Spain emerging as a strong performer and the current engine of GDP growth in Europe.
• 🇫🇷 France faces continued political uncertainty and a lack of visibility, impacting its economic outlook and budget concerns for the following year.
• 💰 The implementation of fiscal measures by the new German chancellor and fiscal packages are key to avoiding recession in Germany.