Morgan Stanley: U.S. GDP Growth Mirage

0:00Morgan Stanley is throwing shade on the hot US GDP story right now. Tax refunds are up 14% from last year, hitting $253 billion total with the average check at $3,642. But is landing at the low end of what they expected, and here's the kicker. Gas prices jump 15% to around $360,000 in an 80-a-gallon, pretty much wiping out. That extra cash for most folks. Over the past few years, the economy snapped back hard after the 2020 contraction of 2.1%, booming 6-2% in 2021, then settling into 2.5%, 2.9%, and 2.1% growth through 2025. That reset shows we're in a cooler phase now, not the wild ride anymore. Consumers feel the squeeze big time since spending drives about 70% of GDP. That bonus refund cash? Because getting guzzled at the pump, leaving less for eating out trips or shopping, add in higher tariffs, pushing effective rates to 11% or more, and everyday budgets look

1:01tighter, dragging on the whole growth vibe. Digging deeper, first quarter GDP tracking at 2.2% might seem solid above Atlanta Fed's 1.3%, but under New York's 2.3% yet Morgan Stanley calls it a, Mirage. Since spending rebounded after last quarter shutdown, masking week 1.1% consumer outlays, soft housing, and rising imports. They're holding steady on their call for 2.2% real GDP growth in 2026 and 1.7% personal consumption, even as Fed, IMF, and CBOI 2.3%, while others dip lower. This consumer drag could keep the momentum in check heading forward. Watch your Durham News Today update, AI powered, and always on.