2min snip

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2025 outlook: Will tailwinds trump tariffs?

Goldman Sachs Exchanges

INSIGHT

Inflation Outlook for 2025

  • Core PCE inflation is currently around 2%, and drivers like rebalancing in the labor market and slower wage growth suggest it will continue to decrease.
  • Lagging components, such as housing, should also help lower inflation.
  • Tariffs will counteract this trend, adding 0.4% to inflation under the baseline scenario (China plus auto tariffs).
  • This results in a revised core PCE inflation forecast of 2.4% by the end of next year.
  • Across-the-board tariffs could push inflation to around 3% or higher by the end of next year.
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