US Economic Slowdown Expected in 2025; Fed Rate Cuts Anticipated

The US economy is projected to slow down in 2025, with potential consequences for the job market. While GDP growth reached 2.5% in 2024, it's a decrease from 3% in 2023. Household consumption and government investment primarily drove this growth. Income growth is slowing as labor markets cool, impacting consumer spending. State government spending is also decreasing. The housing market faces challenges due to elevated interest rates and slowing incomes. The Federal Reserve may need to cut interest rates more aggressively than anticipated to support economic activity. Uncertainty surrounding the new administration's policies, particularly regarding trade, adds to the economic outlook. A passive tightening of monetary policy could lead to a decline in long-term interest rates and a sell-off in equity prices.