The Atlanta Fed’s GDP tracker now indicates that the economy is headed for a 1.5% contraction in the first quarter, after showing 2.3% growth just days earlier. That also marks a sharp reversal from the fourth quarter, when GDP expanded by 2.3%. Several economic indicators have been raising alarms as consumers and businesses brace for Trump tariffs and federal job cuts.

The U.S. economy appeared to be on solid footing just a week and a half ago, but that has changed as several indicators are now raising red flags.

The latest and perhaps the most stunning one came on Friday, when the Atlanta Fed’s GDPNow tracker showed the first quarter is on track for a 1.5% contraction. Only nine days earlier, on Feb. 19, it was pointing to growth of 2.3%.

That also marks a sharp reversal from the fourth quarter, when the U.S. economy expanded by 2.3%. Such growth had previously reinforced views of so-called American exceptionalism, as the U.S. appeared to stand out among other major global economies like China and Europe that were mired in slowdowns.

The Atlanta Fed attributed the sudden change to fresh data on the U.S. trade deficit, which drags on growth, and weaker consumer spending.

On Friday, the trade balance in goods showed a record $153.3 billion deficit in January as imports soared by $34.6 billion versus a $3.3 billion uptick in exports.

While most of President Donald Trump’s tariffs have not gone into effect yet, consumers and businesses have been loading up on imported goods since the election to get ahead of higher prices. The latest report on durable goods orders, which saw an increase, may also reflect a rush to buy imports early.

Despite the shopping spree on imports, overall demand is weaker. Separate data on Friday showed Americans slashed their spending in January at the fastest pace in four years. Unseasonably cold weather was likely a factor, but Trump’s policies—including plans to drastically cut federal spending and downsize the workforce—also had their fingerprints on it.

“Increased uncertainty surrounding trade, fiscal, and regulatory policy is casting a shadow over the outlook,” Lydia Boussour, a senior economist at accounting and consulting firm EY, told the Associated Press.

Other data have also sounded alarms on the economy. Jobless claims were up last week as cuts by DOGE rippled through the labor market, pending home sales hit a record low, and consumer confidence indicators sank on rising fears of tariff-fueled inflation.

In addition, surveys from regional Fed banks found deterioration in the economic outlook as well as plans for capital spending.

To be sure, one quarter of contraction would not constitute a recession. The unofficial rule of thumb is two consecutive quarters, while the National Bureau of Economic Research makes the official ruling on a recession—often after the fact.

Economists at JPMorgan lowered their first-quarter growth outlook to 1.5% from 2.25%, adding that weak January activity should be followed by a rebound in February and March.

“For now we are not inclined to hit the panic button,” they said Friday, noting that labor market data aren’t tracking with a shrinking economy.

The Labor Department will issue weekly jobless claims data on Thursday and its monthly jobs report for February on Friday.

Apollo Management chief economist Torsten Slok said in a note Saturday that the U.S. economy will suffer a “modest stagflationary shock” but won’t slip into a recession.

“In other words, DOGE and tariffs combined are a mild temporary shock to the economy that will put modest upward pressure on inflation and modest downward pressure on GDP,” he wrote.

The U.S. economy has suddenly been thrown into reverse as key GDP indicator flashes stunning negative forecast