According to the National Association for Business Economics, most economists in its survey no longer see downside risks as predominant.
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.
The periodic survey, released on Nov. 25, reveals an upward revision in economic growth projections for both this year and the next, compared to the last time the panel of 38 professional economic forecasters was polled in September. Specifically, the current forecast calls for real inflation-adjusted gross domestic product to increase by 2.7 percent in 2024, up from the 2.6 percent the panelists expected several months ago. The economists’ prediction for 2025 is even more optimistic, forecasting a 2.0 percent pace of growth, up 0.2 percentage points from the 1.8 percent growth they expected a few months before the November election.
“In addition, the largest share of respondents—44 percent—now sees the risks surrounding the outlook as balanced, whereas a majority of respondents in the previous survey thought downside risks were more likely than balanced or upside risks,” NABE president Emily Kolinski Morris said in a statement.
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.
This week will see the release of PCE inflation data for October, with the latest report for September showing that core PCE remained unchanged from August at 2.7 percent year over year, although it jumped by 0.3 percent month over month, up from August’s 0.1 percent increase.
By Tom Ozimek
