Goldman Sachs Exchanges
2025 outlook: Will tailwinds trump tariffs?
Nov 20, 2024
Jan Hatzius, chief economist at Goldman Sachs, and Dominic Wilson, senior advisor in global markets research, share insights on the economic outlook for 2025. They explore the potential impact of Trump's policies on growth and inflation, highlighting a 15% chance of recession. The duo discusses the balance of risks for markets, including high equity valuations and trade policies. They also touch upon how monetary policies may evolve, with possible interest rate cuts, and strategies for investors in navigating the fluctuating landscape.
30:38
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Quick takeaways
- The U.S. economic growth outlook for 2025 is robust at 2.5%, supported by rising real disposable personal income and improved financial conditions.
- Despite potential tariff increases and trade uncertainties, the sentiment remains optimistic for U.S. markets while Europe and China face significant economic challenges.
Deep dives
U.S. Economic Growth Forecast
The outlook for U.S. economic growth remains robust, with expectations for 2025 set at 2.5%, slightly down from 2.8% in 2024. The growth trajectory is supported by a significant increase in real disposable personal income, driven by a faster decline in price inflation compared to wage inflation, leading to a rise in real hourly wages. Financial conditions have improved, shifting from a headwind to a tailwind for growth, contributing an estimated half percentage point boost to the economy. Despite potential policy shifts under the new Trump administration, which include tariff increases and immigration slowdowns, the overall sentiment on growth remains optimistic.
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