Now that the New Year is underway, it is prudent to consider economic predictions for 2025.
In a word, most economists are bullish. And that is a good thing.
The forecast for GDP growth is 2.5% which is decent, and above the predictions for most of our key trading partners (except China). This growth is driven by the resilient spending of consumers as evidenced by the strong holiday season.
- Inflation has come down to 2.5 to 2.7% – a welcome relief.
- Wages expect an increase at 3%, netting consumers ahead in household budgets.
- Fed will likely cut rates to a range of 3.25 – 3.5% by the end of 2025 making car loans, credit card debt and mortgages less expensive.
- Unemployment is likely to come down to 4.2% in the year ahead
- Worker productivity can improve with increase use of technology and automation boosting profits.
- S. oil production expected to rise leading to energy independence toward the end of 2025 and into 2026.
Implications
With the inauguration behind us and a new Administration in place, we are in a pretty good place in terms of the economy, and optimism about our prospects is favorable.
For business planning purposes, our view is that 2025 is shaping up to be a good year for growth.
We encourage clients to welcome the New Year with an optimistic outlook. Revisit your budgets and do some scenario planning that you can unleash if results come in ahead of expectations in the first and second quarters.
Consider doing an exercise with your executive team that examines priorities, resources and goals for the year. Is the team ready to shift? Are there some things they can stop doing, thus freeing up capacity and resources for more productive uses? Are there other things they could do, or start doing, that would create higher value?
At Damen Jackson, we have helped almost 800 clients move forward and make sound fact-based decisions. We put a premium on prudent planning and smart choices. We have the benefit of over 25 years of working with leading brands in a broad range of product categories. Our experienced team is there to complement the know-how of your leadership team, stimulate productive debate, put hard working plans in place, and grow your business.
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