Source: www.kiplinger.com
As the calendar arrives at the new year, here are 10 of our top forecasts for 2025, which figures to be nothing if not full of surprises.
- The economy will stay relatively robust
The economy will stay relatively robust, with GDP growth downshifting from 2.8% in 2024 to a still-respectable 2.4% in 2025. Note that that pace likely exceeds the long-run potential for growth, which appears closer to 2%. Slow growth in the workforce should keep GDP gains moderate for the long haul, but 2025 will outperform. But, a full-blown trade war could slow growth. We are not expecting one, and think Donald Trump will use the threat of big to win concessions from trade partners while imposing targeted duties. But there is a risk that other countries retaliate and tit-for-tat tariffs spiral out of control this year.
2. Inflation will not be completely curbed in 2025
The headline inflation stats are likely to look promising early in the year. But, in the second half, look for them to perk up again. That means few interest rate cuts ahead from the Federal Reserve, which won’t have the leeway to cut with inflation too high.
3. Look for the dollar to remain strong in 2025
Look for the dollar to remain strong, and possibly gain even more in 2025. The U.S. economy will keep growing faster than most advanced economies, and fairly elevated interest rates will further support the buck vs. other currencies.