(Bloomberg) -- The US economy is setting up to take a major step back in the first quarter after a pair of reports showed weaker consumer spending and a dramatic widening of the trade deficit at the start of the year, according to the Federal Reserve Bank of Atlanta’s latest GDPNow forecast.

Gross domestic product is seen declining an annualized 1.5% in the current quarter, representing a sizable markdown from the 2.3% pace of growth expected just days ago. To be sure, it’s still early in the quarter, and the GDPNow estimate will get updated to incorporate more monthly data when they become available.

The regional Fed bank sees net exports subtracting a whopping 3.7 percentage points from GDP. Government figures earlier on Friday showed the merchandise trade deficit in January widened more than 25% to a record $153.3 billion. Prior to the data, the GDPNow forecast saw trade subtracting just 0.41 percentage point.

Meanwhile, consumer spending is so far projected to add less than 0.9 point to first-quarter GDP, down from the 1.53 points contribution that was expected prior to the latest consumption data.

Inflation-adjusted personal spending declined 0.5% in January, the most in nearly four years. Consumers pulled back on purchases of motor vehicles and other goods after months of robust spending in the run-up to the holiday-shopping season. January was also characterized by severe winter weather in a large portion of the country.

--With assistance from Alex Tanzi.