The US economy remains on a steady trajectory, and Bank of America economists anticipate this momentum will carry through 2025.
In a research note shared Monday, BofA’s economics team, led by Claudio Irigoyen, forecasted the US economy to grow at an annualized rate of 2.4% in 2025. This projection surpasses the current Bloomberg consensus estimate of 2% growth. Despite lingering uncertainties tied to President-elect Donald Trump’s proposed economic policies, including tariffs, corporate tax cuts, and immigration reforms, the US economy shows resilience.
Navigating Policy Risks
Trump’s proposed policies could introduce inflationary pressures while challenging economic growth and exacerbating the federal deficit. A hawkish stance on tariffs combined with rising interest rates may strengthen the US dollar, potentially disrupting global financial conditions. These dynamics could ripple through the international economy, with BofA warning of a “major shock” to global markets.
Yet, the US stands uniquely equipped to endure such challenges. Aditya Bhave, senior US economist at Bank of America, noted, “The US imports a lot of goods, but it doesn’t import recessions—it only exports them.”
Bhave highlighted that the US economy’s resilience and self-sufficiency position it to withstand any global fallout, a stark contrast to more vulnerable regions like Europe and China.
Data Underpins Confidence
Recent economic data underscores this optimism:
Consumer confidence has reached an 18-month high.
US economic output is the strongest since August 2022.
Retail sales exceeded expectations in October.
Unemployment remains stable at around 4%.
Inflation has moderated, nearing the Federal Reserve’s target of 2%.
This strong domestic performance stands in sharp contrast to the struggles faced by other developed economies, such as Europe and China. Bhave emphasized, “The US enters any potential disruption to trade policy on much firmer ground than Europe or China.”
The Tariff Debate
Among Trump’s campaign pledges, tariffs have garnered significant attention. Proposed measures include a blanket 10% tariff on all trading partners and a 60% tariff on Chinese imports. Economists warn that retaliatory trade actions could spark a prolonged “tit-for-tat” trade war, leading to sustained inflation.
However, BofA remains cautiously optimistic, suggesting the administration’s tariff plans may be less severe than outlined. “Our baseline scenario assumes tariffs will be implemented but at a reduced scale,” the report noted.
Bhave acknowledged that tariffs could disrupt investment and exports but emphasized that the imbalance in US trade—importing more than it exports—shields the domestic economy from the full impact of trade disputes. “By definition, tariffs pose a much greater threat to trading partners than to the US,” Bhave added.
A Resilient Outlook
As 2025 approaches, the US economy’s robust fundamentals and strategic position in global trade provide a foundation for continued growth. While policy uncertainties remain, Bank of America’s projections reflect confidence in the US economy’s ability to adapt and thrive amid evolving challenges.
