The American economy in 2025.. 10 key questions and answers | economy

Goldman Sachs published an economic memorandum that sheds light on the most prominent questions that will shape the features of the American economy in 2025.

The report, published on the Investing platform, provides in-depth analysis on economic growth, consumer spending, inflation, and interest rates, while highlighting the impact of economic and political policies on the overall landscape.

1. Will GDP growth exceed expectations?

Goldman Sachs expects US GDP growth to reach 2.4% through 2025, higher than the general consensus of 2.0%.

The bank attributes these positive forecasts to strong domestic demand led by investments in the private sector, especially in the areas of artificial intelligence, and federal incentives, such as the inflation reduction law.

Goldman Sachs points out that the sectors benefiting from these investments, such as technology and clean energy, will play a decisive role in driving the economy.

2. Will consumer spending continue to hold up?

Yes, Goldman expects consumer spending to increase by 2.3% in 2025, driven by multiple factors such as rising real incomes, the labor market continuing to create new jobs, and the wealth effects of improving stock markets.

The return of consumer confidence after years of high inflation will enhance the purchasing power of American families, which contributes to supporting economic activity.

3. Will the job market continue to slow?

Goldman Sachs doesn’t expect that. Instead, the unemployment rate is likely to fall slightly to 4% by the end of 2025.

The bank explains that stability in the labor market is driven by the growth in demand for labor, especially in sectors related to technology and services, and the decline in the supply of migrant labor as a result of the more stringent policies of the Trump administration.

4. Will core inflation fall below 2.4%?

Goldman Sachs sees core inflation continuing to decline, reaching 2.1% by the end of 2025. This forecast is driven by easing pressures on wages and subdued inflation resulting from supply chain disruptions. However, the company emphasizes that any changes in customs policies may affect these forecasts.

5. Will the US Federal Reserve lower interest rates?

Goldman expects the Federal Reserve to cut interest rates three times in 2025, at quarterly or spaced intervals, in March, June, and September. This trend reflects the Fed’s confidence in controlling inflation, which provides additional support for economic growth.

6. Will the Fed raise its estimate of the neutral rate?

Goldman expects the Fed to raise its estimate for the neutral rate (the rate that keeps inflation stable) to 3.25% or more, based on the broad effects of domestic demand and economic stability.

This increase also reflects expectations of recovery in important consumer and investment sectors.

7. Will Trump try to fire the head of the Federal Reserve?

Goldman rules out that President-elect Donald Trump will try to fire Federal Reserve Chairman Jerome Powell. This is based on previous experiences from his first term, as the administration concluded that the law does not allow the dismissal of the Federal President except for a “legitimate reason,” which is difficult to achieve.

8. Will immigration policies change?

Projections indicate that net migration will decline to about 750,000 people annually, in line with the more stringent policies the Trump administration is expected to adopt. This decline may lead to a reduction in labor supply, which may affect some sectors that rely heavily on migrant labor.

9. How will trade tensions and tariffs affect?

Goldman expects higher tariffs on Chinese imports, but without implementing comprehensive duties on all imports. The bank believes that such policies may lead to trade disruptions and increased costs for companies and consumers. However, the overall impact will depend on how responsive China and other countries are to these policies.

Goldman Sachs paints a picture of 2025 as a period of relative stability with key challenges related to trade tensions, inflation and immigration policies.

10. What are the challenges related to the federal budget?

Goldman does not expect the federal deficit to shrink in 2025, as tax cuts and increased defense spending will offset any attempts to control spending. The company also expects a moderate increase in revenue from tariffs, which may provide some temporary support to the budget.

Goldman Sachs paints a picture of 2025 as a period of relative stability, but with major challenges related to trade tensions, inflation, and immigration policies.

Despite the risks, positive expectations for economic growth and consumer spending remain supportive factors that enhance the US economy’s ability to withstand and adapt.