JP Morgan US economic outlook for next year, in breif
- There are now upside risks to growth from deregulation and tax cutting and downside risks from tariffs and general policy uncertainty
- But one shouldn't lose sight of the business cycle, which has been performing well
- We look for only a mild downshift in growth in 2025 to 2%, with a small additional rise in the unemployment rate to 4.5%
- Core PCE inflation expected to decelerate a half-point next year to 2.3%
- We look for the Fed to cut 25bps in December and another 75bps by the end of 3Q25, then stop at 3.75%
- Labor supply is set to slow over the next couple years, with breakeven payroll growth falling under 100k by 2026
- labor demand also keeps moderating, though not enough to create a recession
- Growth with be supported by solid but not speculator business productivity gains of of 1.5-2.0% per year
- We assume that tariffs on China will rise sharply but not be raised significantly elsewhere, leading to slower trade volumes and higher import prices
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