The U.S. economy is set for a slowdown in growth and an uptick in inflation, according to a survey of 49 leading economists. The consensus among the economists is that President Donald Trump’s sweeping tariffs and aggressive restructuring of government institutions will hamper growth and elevate inflationary pressures. The economists expect the U.S. economy to expand by only 1.6% in 2025, down from the 2.3% projected in December.
The Organisation for Economic Co-operation and Development (OECD) also warned that Trump’s trade policies would result in slower growth not only in the U.S. but also globally, with growth forecasts reduced for numerous G20 nations. Robert Barbera, an economist at Johns Hopkins University, pointed to several factors contributing to this economic malaise, including tariffs, tax cuts, government employment and expenditure reductions, assaults on education funding, and challenges to Federal Reserve independence. “In my 50 years of forecasting, I have never seen such a multifaceted assault on growth drivers and institutional stability,” Barbera said.
The economists predict that Trump’s policies will push the annual rate of the core personal consumption expenditures price index — a key metric for the Federal Reserve — to 2.8% by the end of 2025, up from a December forecast of 2.5%.
Economists predict slow US growth
This anticipated rise in inflation further complicates the Federal Reserve’s task of stabilizing prices and supporting a healthy labor market.
Despite these economic headwinds, President Trump continues to engage in high-stakes international negotiations. Trump and Russian President Vladimir Putin are discussing a ceasefire in the Russia-Ukraine war, with significant concessions on the table, including land and power plants. These discussions reflect the broader geopolitical turbulence that adds to economic uncertainties.
The economic backdrop is also unsettling for businesses and consumers, who increasingly report declining sentiment. This pervasive uncertainty and the caution it breeds in spending and investment decisions are crucial factors in the projected economic slowdown. As the U.S. braces for these economic and geopolitical challenges, attention will remain focused on how policymakers respond to preserve economic stability and public trust in government institutions.
Image Credits: Photo by Markus Spiske on Unsplash
