Summary
The U.S. economy is strong as we start both 2025 and a second Trump presidency. We expect to see that 4Q GDP rose 2.8% and 2024 GDP grew approximately 2.6%. At the beginning of 2024, we expected 1.7% growth for the year. We expected Personal Consumption Expenditures to average about 1.2%. The final tally could be 3%. The job market cooled but didn’t freeze, and the Fed’s well-telegraphed plans to cut short-term rates lead to a beneficial decline in long-term rates through the summer. While many consumers are still struggling with inflation, the wealthiest households are spending, bolstered by 2.4% unemployment for college graduates, a low, locked-in mortgage rate, and gains in their stock portfolio. Our optimism is tempered by the jump in the 10-year Treasury rate to 4.8% from 3.65% in September. Our 2025 forecast for U.S. GDP growth is 2.1%. The median estimate of Fed officials also is 2.1%. Our quarterly GDP estimates for 2025 are 1.7%, 1.8%, 2.3%, and 2.6%. Four indicators driven by a broad array of timely data support our assessment that the economy is healthy and growing. On January 9, the Federal Reserve Bank of Atlanta’s GDP Nowcast was estimating 4Q growth of 2.7%. On January 10, the Federal Reserve Bank of New York’s Staff Nowcast for 4Q called for 2.36% growth. The Weekly Economic Index tracked by the Federal Reserve Bank of Dallas is based on 10 daily and weekly indicators of consumer behavior, the labor market, and production. If, for example, an in
