The U.S. economy and job market are expected to cool in 2025 but still turn in another year of solid growth as inflation eases further, forecasters say.
But as a result of President-elect Donald Trump’s dueling policy agendas, the outlook is leavened with an unusual dose of uncertainty.
Trump’s plans to impose massive tariffs and deport millions of immigrants who lack permanent legal status are likely to reignite inflation and dampen economic growth, according to forecasters. Yet his pledge to extend and expand the sweeping tax cuts passed in his first term and ease the regulatory burden on businesses could juice the economy and have mixed effects on inflation.
So, which of the incoming administration’s contrasting policy agendas is likely to move the needle for the economy this year?
“The only certainty is uncertainty,” said Ryan Sweet, chief U.S. economist of Oxford Economics.
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“If the focus is more on deregulation, tax cuts and potential sweeteners than changes to tariffs and immigration, then growth could be much stronger in 2025,” Diane Swonk, chief economist of KMPG U.S., wrote in a report. “Otherwise, risks are for higher inflation and weaker expansion.”
How will the economy do in 2025?
Generally, forecasters see 2025 as a transition year as the economy continues its post-pandemic recovery but at a lower temperature before Trump’s policies fully take effect. For workers, healthy wage growth is likely to keep…
