[The world faces a plethora of serious problems entering 2025, but the US economy is not one of them. The US economy has continued to show resilience, defying forecasts and growing at a steady pace. Despite lofty interest rates and high inflation, financial markets have boomed, and hiring has slowed, but layoffs have remained relatively low.
The Federal Reserve’s war on inflation has slowed economic growth, but not as much as feared. The unemployment rate remains relatively low, and forecasters do not see the ingredients for a recession. According to JPMorgan’s chief global strategist, David Kelly, the economy will need a shock to enter a recession, and he doesn’t see anything internally in the economy to cause one.
External risks do loom, including a potential trade war, energy price shocks, and supply disruptions. However, oil prices are lower than they were in 2022, and US production has surpassed that of any other country. Gas prices are also expected to fall, reaching an average of $3.22 a gallon in 2025, according to GasBuddy, which could bolster consumer confidence and keep inflation lower than expected.
Despite some discomfort over higher prices in various areas, paychecks have consistently grown faster than prices, allowing Americans to catch up with the increased cost of living. The Federal Reserve has started to cut interest rates, which should provide a boost to growth in the coming months.
However, there are also risks to watch out for, including a potential recession caused by a severe market correction, a trade war, and internal conflicts within the new administration. President-elect Donald Trump is focused on boosting the economy, but some economists are concerned about the impact of his trade agenda and promise to cut red tape on inflation and the economy.
Source link
