The US economy is entering 2025 with a steady pace, defying forecasts and lofty interest rates. Despite high inflation, financial markets have boomed, and hiring has slowed but layoffs remain relatively low. Economic growth continues to outpace expectations, with no signs of a recession in sight.
According to David Kelly, chief global strategist at JPMorgan Asset Management, the economy needs a shock to enter a recession, and he doesn’t see anything internally threatening its stability. However, external risks like trade wars and potential disruptions in energy markets remain.
Gas prices have fallen, with projections indicating an annual average of $3.22 per gallon for 2025. This could bolster consumer confidence and keep inflation statistics low. Paychecks are also growing faster than prices, providing real wage increases that can help Americans cope with the cost of living.
The Federal Reserve has dropped interest rates to combat inflation, which should provide a boost to growth in the coming months. President-elect Donald Trump is expected to implement pro-business policies, including tax reform and deregulation, which could stimulate economic growth.
However, risks remain, such as a potential port strike, trade wars, and conflicts with the Federal Reserve. Investors are on high alert for any signs of tension between Trump and Fed Chair Jerome Powell, which could impact market sentiment. Additionally, emerging risks like severe financial storms, cyberattacks, pandemics, and natural disasters could affect consumer and business confidence.
As Kelly said, “Don’t worry about the stuff you’re expecting, worry about the stuff you don’t expect.” The US economy will continue to navigate these uncertainties in 2025.
Source: https://edition.cnn.com/2025/01/01/economy/2025-economy-jobs-markets/index.html