Episode Details

Morgan Stanley casts doubt on the current U.S. GDP narrative, despite tax refunds surging 14% to $253 billion. The average refund is $3,642, but its lower than anticipated, and higher gas prices (up 15% to $3.60/gallon) are eating into that extra cash. The economy has cooled after the 2020 contraction, with GDP growth slowing to 2.1% in 2025. Consumers are feeling the pinch, as spending drives 70% of GDP, and the refund boost is being swallowed by fuel costs, leaving less for other expenses. Higher tariffs are also squeezing budgets. Morgan Stanley dismisses the first quarter GDP growth of 2.2% as a mirage, as government spending and weak consumer outlays masked the slowdown. They stand by their forecast of 2.2% real GDP growth and 1.7% personal consumption growth in 2026, despite others predicting higher growth.

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