2025 US Economic Outlook: New Policies and Trends

This report presents an analysis of the US economic outlook for 2025, focusing on anticipated policy changes following the recent Republican elections. It outlines expected tariff increases on imports from China and automobiles, projected to raise effective tariff rates by 3-4 percentage points. Additionally, the report forecasts a tightening of immigration policy, reducing net immigration to approximately 750,000 per year, which is below pre-pandemic averages. The report also discusses the potential extension of the 2017 tax cuts and modest additional tax cuts. Despite these significant policy changes, the report suggests that they are unlikely to substantially alter the overall economic trajectory or monetary policy. It anticipates GDP growth to exceed expectations at 2.4% for 2025, driven by consumer spending and business investment. The report concludes with a low 12-month recession probability of 15% and highlights risks related to proposed tariffs and fiscal sustainability.