Key Points

  • Economists surveyed by Wolters Kluwer predict the U.S. economy will grow 2.1% in 2025, continuing to exceed its long-term trend level.
  • Economists from institutions including Goldman Sachs, Ford Motor, KPMG, and Wells Fargo have raised their growth forecasts by 0.1 percentage point and see only a 27% probability of a recession over the next 12 months.
  • "While the consensus still expects the economy to slow in the coming quarters, the slowdown is more moderate than previously anticipated," said Sandy Batten, senior economist at Haver Analytics, in a report. "Over the entire forecast horizon, real GDP growth is no longer expected to fall below trend in any quarter."

In-Depth Analysis

Federal Reserve officials estimated in their median projections released in September that the economy's long-term annual growth rate is1.8%. However, actual performance has far exceeded expectations.

According to data from the U.S. Bureau of Economic Analysis, GDP grew at an annualized rate of 1.4% in the first quarter,grew 3% in the second quarter, and grew 2.8% in the third quarter, defying recession forecasts. The Atlanta Fed estimates thatGDP will expand at a 2.5% annualized rate in the fourth quarter。

Wolters Kluwer noted that economists expect the U.S. economy to close out the year with GDP growth of 2.7%, whereas in January they had forecast only 1.6% growth for the full year.

"Federal Reserve Chair Jerome Powell said Thursday during a speech in Dallas: "The U.S. economy has performed exceptionally well recently, clearly outperforming all other major economies globally。”

Powell said: "Consumer spending growth has remained strong, supported by rising disposable income and solid household balance sheets. Over the past year, business investment in equipment and intangible assets has accelerated."

Additionally, hours after a Labor Department report showed initial jobless claims for the week ending November 9fell by 4,000 to 217,000(below expectations), Powell said: "The labor market remains in solid condition."

Powell expressed confidence in the central bank's ability to sustain GDP growth, keep the labor market healthy, and slow inflation to its 2% target through "appropriate adjustments" to monetary policy.

Last week, policymakers cut the benchmark interest rate by 25 basis points to a range of 4.5% to 4.75%, citing some softening in the labor market and progress in slowing inflation toward target.

Based on median projections from the September meeting, central bank officials expect to lower the federal funds rate to 4.4% by December and to 3.4% by the end of next year.

However, Powell said policy is not on a "preset" path. "In considering further adjustments to the target range for the federal funds rate, we will carefully evaluate incoming data, the evolving outlook, and the balance of risks."

He also said any additional easing is not urgent. "The economy is not sending signals that we need to be in a hurry to cut rates," Powell said. "The strength we are currently seeing in the economy allows us to make decisions carefully."