current
US Economic Outperformance
Despite the potential negative impacts of tariffs, the US economy is projected to outperform other developed markets, driven by tax cuts, deregulation, and improved business sentiment.
Timeframe
near-term
Categories
Subcategories
Impact areas
Detailed Analysis
The report projects continued US economic outperformance, despite the anticipated headwinds from increased tariffs. This projected growth is attributed to a combination of factors, including proposed tax cuts, a more relaxed regulatory environment, and a boost in business confidence, often referred to as "animal spirits." "If so, the US economy should grow 2.5% in 2025, outperforming consensus expectations and other DM economies for the third year in a row." While acknowledging the potential for tariffs to negatively impact growth, the report suggests that these positive factors will ultimately outweigh the negative impacts, at least in the near term.
Context Signals
Global GDP growth tracking at 2.7% in 2024
Continued strength in real disposable household income in the US
Easing financial conditions due to central bank rate cuts
Edge
The potential for increased infrastructure spending under the second Trump administration could further boost US growth.
Sustained US outperformance could attract further foreign investment, strengthening the dollar.
If the positive impacts of tax cuts and deregulation are short-lived, US growth could falter in the longer term.
