Economic Resilience: A Strong Start to 2025
As the United States embarks on a new year and a second Trump presidency, the economy is demonstrating remarkable strength. Our latest projections indicate a robust 4Q GDP growth of 2.8% and a 2024 GDP growth of approximately 2.6%. This surpasses our initial expectations of 1.7% growth for the year.
Consumption and Job Market Trends
Personal Consumption Expenditures are expected to average around 3%, significantly higher than our initial forecast of 1.2%. The job market, although cooling, remains resilient, with the wealthiest households driving consumption. This is largely attributed to the low unemployment rate of 2.4% among college graduates, favorable mortgage rates, and gains in their stock portfolios.
Interest Rate Dynamics
The Federal Reserve’s well-telegraphed plans to cut short-term rates have led to a beneficial decline in long-term rates throughout the summer. However, the recent jump in the 10-year Treasury rate to 4.8% from 3.65% in September has tempered our optimism.
GDP Growth Projections for 2025
Our forecast for U.S. GDP growth in 2025 stands at 2.1%, aligning with the median estimate of Fed officials. We anticipate quarterly GDP growth rates of 1.7%, 1.8%, 2.3%, and 2.6% for 2025.
Supporting Indicators
Four key indicators, driven by timely data, reinforce our assessment of a healthy and growing economy. The Federal Reserve Bank of Atlanta’s GDP Nowcast estimates 4Q growth at 2.7%, while the Federal Reserve Bank of New York’s Staff Nowcast predicts 2.36% growth. The Weekly Economic Index, which tracks consumer behavior, labor market, and production indicators, further supports our optimistic outlook.
A Promising Year Ahead
As we navigate the complexities of the economic landscape, our analysis suggests a strong start to 2025. With a robust GDP growth rate, a resilient job market, and supportive indicators, we remain bullish on the U.S. economy’s prospects for the year ahead.
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