2025 outlook: Will tailwinds trump tariffs?

Goldman Sachs economists Jan Hatzius and Dominic Wilson share their economic outlook for 2025, forecasting sustained above-trend growth in the U.S., even with possible policy changes under a Trump administration. While factors like tariffs and reduced immigration may hinder growth, they believe these challenges will be balanced out by more favorable fiscal policies and relaxed regulations. They anticipate inflation will hover around 2%, although tariffs could push it slightly higher. Despite current high market valuations, the robust economic environment is likely to keep asset prices buoyant in the short term. However, significant risks loom, particularly from potential extreme policy shifts, such as widespread tariffs, which could have a major impact on global growth and market stability.