Plenty of economic data is headed our way this week, including a couple of important indicators: On Thursday, we’ll get the first revision of gross domestic product for the first quarter of this year — that’s a more refined reading of the strength of the U.S. economy.
Then on Friday, we’ll get the personal consumption expenditures price index for April. That, of course, is the Fed’s preferred measure of inflation.
This week’s revision of GDP could well confirm what the first estimate showed: That the U.S. economy shrank in the first quarter of 2025.
“The second estimate, they've got more data, it's apt to show slightly slower consumer spending. If that's the only thing that changes, you probably have a bigger contraction in GDP growth,” said Wells Fargo economist Tim Quinlan.
He said this first quarter, a lot of the apparent slowdown was due to companies importing goods like crazy to get ahead of tariffs.
But what the revised number for January, February, and March doesn’t tell us is how tariffs themselves hit the economy. Because a lot of them hadn’t happened yet.
“We had an earthquake in April. We had a more significant change to trade policy than we've experienced, certainly in the last 80 years, arguably in the last century,” Quinlan said.
Then, there’s the PCE price index for April, also out this week. Last year, this would have been a major event.
“Anything that was a gauge of inflation was so massively important that financial markets absolutely hinged on the slightest developments,” Quinlan said.
If the PCE sneezed, the financial markets got a cold.
But now, Quinlan said, markets might not even say “Gesundheit.” Because the data is so last month.
“It's still before the impact of tariffs are really kind of having their full pass through effect on inflation,” he said. “I'm not trying to be a bummer and be like, none of this data matters, but I kind of feel like it's a little bit inconsequential.”
These backwards-looking data points do give us a better sense of where the economy is, because they give us a clearer picture of where it’s been.
“They're useful because they give us a standard, sort of reliable, comprehensive snapshot of the economy,” said Middlebury College economics professor Kristina Sargent.
She said GDP and PCE are like the grades she gives her students after the semester is over: “They don't change the performance of a student over the course of the semester, but they do give a clear summary of how the economy or the student performed.”
And just like an employer might look at a grade to decide whether to give a student a job, policymakers at the Federal Reserve look at these economic reports to decide if they should raise or lower interest rates.
And, Sargent said, they look at all of the grades before they make a final decision.
“The Fed's not going to rely on any one data point anyway,” she said. “The trend is really important.”
As most college students could tell you, some grades are part of a pattern. And some, good or bad, are just one-time blips.
