As the final days of December approach, it’s time for Wall Street’s favorite seasonal game: making predictions about whether the U.S. economy will fall into a recession in the coming year.
Coming off a year of record-setting stock market gains and lower — albeit still elevated — inflation, many financial pros are relatively sanguine about the outlook for 2025. For example, the Securities Industry and Financial Markets Association’s Economist Roundtable has a generally upbeat attitude. The survey of more than 20 economists found that, on average, respondents say they predict 1.9% GDP growth in 2025.
That’s less than the average expectation of 2.4% GDP growth in 2024 but suggests that the U.S. economy will keep chugging along without slipping into a recession. Gross domestic product, or GDP, is a broad measure of the country’s economic activity. Economists tend to be happy with annual GDP growth in the 2% to 3% range. Too little growth — or an economy that shrinks — raises concerns about recession, but runaway growth isn’t ideal, either, since an overheated economy can trigger inflation.
The National Bureau of Economic Research (NBER) is the quasi-official arbiter of when the economy enters and exits recessions, but a good rule-of-thumb definition for a recession links it to two consecutive quarters (half a year) of negative GDP growth. That indicates the economy is contracting instead of growing.
Will we have a recession in 2025?
Although nobody has a crystal ball, the consensus seems to be that the economy will continue to expand in 2025, albeit at a slower rate of growth than it did this year. SIFMA says nearly half of roundtable members believe the odds of a recession in 2025 to be 15% or less, while another third estimate that the likelihood of a recession is between 15% and 30%.
Here are what some individual financial experts have predicted recently about the 2025 economy.
David Mericle, chief U.S. economist, Goldman Sachs Research
“Recession fears have diminished, inflation is trending back toward 2%, and the labor market has rebalanced but remains strong,” Mericle wrote in a Nov. 20 post, predicting 2.5% GDP growth for the year.
He added that there are three big expected policy changes as a result of Republicans’ sweep of the White House and Congress that could affect the economy in 2025: more tariffs, tighter immigration policy and the extension of a slew of expiring 2017 tax cuts passed during President-elect Donald Trump’s first term.
Paul F. Gruenwald, global chief economist, S&P Global
“Even before taking office, a second Trump administration is already moving the macro-financial needle and raising downside risks,” Gruenwald wrote in a Nov. 27 research outlook. These implications go beyond just the U.S., he explained, and could have a significant impact on the global economy.
“Potentially large changes in fiscal, trade and immigration policy from the U.S. are significant unknowns at this juncture,” he wrote. “Given the size of the U.S. economy, policy action on any of these fronts can move the global needle.”
Still, Gruenwald said he predicts 2% GDP growth for the U.S. next year.
Mark Zandi, chief economist, Moody’s Analytics
“I think the economy is on solid ground,” Zandi said on a Dec. 4 episode of the podcast The David Lin Report. Zandi said he isn’t anticipating a recession in 2025 in spite of some labor market metrics indicating that a recession could be imminent, because distortions in the labor supply threw off the calculus.
Although some potential changes teased by the incoming Trump administration, such as higher tariffs, could buffet the economy, Zandi said there is still reason for optimism. He told Lin, “I think that will pose some threats and challenges… [but] I think the fundamentals are good.”
Joe Davis, global chief economist, Vanguard
Davis said in a Dec. 11 forecast posted on the firm’s site that a recession isn’t the firm’s “baseline” expectation, which calls for 2.1% economic growth in 2025.
Neil Shearing, group chief economist, Capital Economics
Shearing said that even if the stock market were to come tumbling down next year, it doesn’t necessarily mean a recession is in the offing.
“The bursting of this bubble would be a headline-grabbing event, but its macro consequences could be surprisingly limited,” he wrote in an analysis published Tuesday. “GDP may stagnate for a couple of quarters, but the recession that many might anticipate from this is by no means inevitable.”
Steven Hanke, professor of applied economics, Johns Hopkins University
Of course, not everyone is predicting a blockbuster economy next year.
“My view is that the economy is going to slow down and probably will experience a recession next year,” Hanke said in a Nov. 15 NYSE TV interview. He went on to warn about the potential impacts of Trump’s trade policies on economic growth, adding, “If he institutes a lot of the protectionist measures that he’s talking about, it’s going to be a big negative for the economy.”
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