Economists Grow More Optimistic About the US Economy in 2025

Economists are expressing greater optimism about the U.S. economy as President-elect Donald Trump prepares to take the reins at the White House, with the latest National Association for Business Economics (NABE) survey showing that economists have raised their growth projections substantially for 2025 and most no longer see downside risks as predominant.
Most of the panelists also expect inflation to cool further, predicting that the Consumer Price Index (CPI) will slow to 2.3 percent in annual terms by the end of 2025, and the Federal Reserve’s preferred inflation gauge, the core Personal Consumption Expenditure (PCE) price index, will come in at 2.1 percent by that time. Slowing inflation means more room for the Federal Reserve to lower interest rates, which the panelists expect will take place “gradually but consistently.”
Fed policymakers focus more on core PCE, which excludes the volatile categories of food and energy, when assessing inflation trends as this gauge provides a more stable measure of underlying inflation pressures.
While the Federal Reserve Bank of Cleveland’s inflation nowcasting model indicates a near-term increase in core PCE inflation, it hints at a gradual decline later, aligning with the Federal Reserve’s latest Summary of Economic Projections, which foresees a downward trajectory for core PCE in both 2024 and 2025.
The increase in optimism about the future of the U.S. economy expressed by NABE forecasters dovetails with a jump in positive sentiment expressed by consumers and members of the business community alike.
“The business mood has brightened in November, with confidence about the year ahead hitting a two-and-a-half year high,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement. “The prospect of lower interest rates and a more pro-business approach from the incoming administration has fueled greater optimism, in turn helping drive output and order book inflows higher in November.”
The University of Michigan Consumer Sentiment survey, released on Nov. 22, showed an uptick in consumer confidence, while year-ahead inflation expectations eased.