07 MAY 2025

From Boom to Blur: The U.S. GDP Story in 2025

- MYCPE ONE Insights Team

After a shaky start to 2025, the outlook for the U.S. economy is cautiously improving. JPMorgan has raised its 2025 GDP forecast from 0.2% to 0.6%, citing the White House’s decision to ease tariffs on China as a key reason for the shift. With reciprocal tariffs paused and a temporary U.S.-China trade deal in place, recession fears, once hovering above 50%, are now fading. Inflation also surprised to the downside. The April Consumer Price Index (CPI) rose just 2.3% year-over-year, its slowest pace since February 2021, while core inflation remained steady at 2.8%. Markets responded calmly, and Treasury yields dipped as investors welcomed the reprieve.

Still, economists warn that the inflation impact of Trump’s sweeping tariffs, implemented in early April, may not appear until June or later. The Fed held interest rates steady at its May meeting, signaling a wait-and-see approach amid “stagflation” concerns. Goldman Sachs and Deutsche Bank both noted that headline inflation data may not reflect the true cost pressures consumers will face in coming months. As tariff policy continues to evolve, both consumer sentiment and investor confidence are riding waves of uncertainty, making Q2 and Q3 critical for understanding the trajectory of 2025.

Until next time…

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