Investing.com -- BCA Research has issued a warning that the U.S. economy is showing signs of "rapidly slowing economic growth" and that they are now "officially on recession watch."
BCA highlighted in a note Thursday that the Atlanta Fed’s GDPNow model has Q1 growth tracking at -2.8%.
While this number may appear alarming, they state it is "somewhat deceiving as a surge in import growth brought on by tariff front-running is imparting a temporary drag of 3.57%."
However, the underlying data is still concerning, with "consumer spending on track to contribute just 0.1% to growth in Q1."
BCA attributes some of this consumer weakness to "unusually cold January weather," but cautions that it is not the only factor at play.
"Downbeat earnings guidance from Walmart (NYSE:WMT), Target, Home Depot (NYSE:HD), Lowe’s (NYSE:LOW) and Best Buy (NYSE:BBY) suggests that weather isn’t the whole story," they wrote.
With new tariffs only just starting to take effect, BCA is closely watching key economic indicators for further signs of trouble. "The February retail sales report will be a particularly important signal of US consumer health. Stay tuned," they warned.
Financial markets have already reacted negatively to the recent tariff announcements, but BCA suggests that the broader economic slowdown may pose an even greater concern.