• The U.S. economy’s momentum remains reasonable before the impact of President-elect Trump’s policies in 2025 and 2026.  While high uncertainty exists on the scale and timing of policy, the strategic bias is clear – sizeable tax cuts that will boost the budget deficit; tariffs (threats and actual) to affect trade and other concessions; immigration crackdown and less war. This leads us to see a boost to the U.S. economy and inflation into 2026, which will likely cause the Fed ending easing by June 2025 and consider a 2026 tightening cycle.  
• The economic and policy outlook for other countries around the world depend on the spill over of new U.S. policies but also on divergent domestic conditions. Two key questions are how much will the ECB cut rates, and how aggressively will China stimulate fiscal policy? For financial markets the question is how long US exceptionalism can last and can the U.S. equity market ignore high bond yields?

Continuum Economics’ September Outlook will assess these key issues. To hear our latest 2024 and 2025 forecasts, please join our Outlook Webinar on September 27.