Goldman Sachs economists predict a 2.4% GDP growth for the US in 2025, driven by strong domestic demand and AI-powered business investments. They also anticipate three rate cuts by the Federal Reserve in 2025, citing declining inflation and the impact of potential tariffs.
Goldman Sachs economists outlined ten critical questions shaping the outlook for the U.S. economy in 2025 in a note Monday. Goldman forecasts a 2.4% GDP growth for 2025, surpassing the 2.0% consensus. They attribute this to robust private domestic demand and business investment supported by artificial intelligence and federal incentives like the Inflation Reduction Act. Yes, according to the investment bank. They expect consumer spending to rise 2.
3% in 2025, driven by solid real income gains, a strong labor market, and wealth effects from rising equity markets. Goldman doesn’t believe so. The unemployment rate is expected to dip slightly to 4% by the end of 2025. Goldman sees strong demand growth and slowing immigrant labor supply contributing to this stability. Goldman anticipates core PCE inflation to fall to 2.1% by year-end 2025, barring tariff impacts, as wage pressures ease and catch-up inflation subsides. Goldman predicts three rate cuts at a quarterly or every-other-meeting pace in March, June, and September 2025. This dovish stance reflects the bank’s confidence in inflation’s decline and tempered impacts from potential tariff policies. Goldman Sachs economists anticipate the Fed will raise its median neutral rate estimate to 3.25% or higher, reflecting broader demand influences. The bank doesn’t think so. They stated that the impression they have “is that the White House concluded during Trump’s first term that it cannot remove the Chair because the law only permits this for cause, and courts are unlikely to agree that failing to deliver rate cuts meets this standard.” Deficit reduction is unlikely, according to the bank, with tax cuts and defense spending offsetting fiscal constraints. “We also expect federal spending growth to rise somewhat, particularly on defense. A modest gain in tariff revenue, as noted earlier, would partly offset these changes,” says Goldma
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