President-elect Donald Trump's administration is expected to bring significant policy changes, with concurrent impacts on inflation, trade, and economic growth. Consumer spending should moderate, with housing affordability remaining a challenge due to high home prices and interest rates. Investment spending will likely be positive with artificial intelligence spending alongside equipment investments boosting growth.
The US Federal Reserve (Fed), with its dual mandate of full employment and price stability, will maintain a vigilant stance on monetary policy, balancing inflationary pressures from potential labor supply constraints and tariffs.
The decisive victories in November of Donald Trump and the Republican Party appear to be a mandate for meaningful change that will influence the US economic outlook in 2025 and beyond. While the GOP’s ambitious agenda is expected to increase US inflation, its impact on economic growth should be more mixed, depending on the scale and sequence of policy measures enacted. The incoming administration expects to reset trade relations with the threat of tariffs, tighten immigration laws and deport undocumented immigrants, broaden industry deregulation, and consider new ideas for increasing US government efficiency. A Republican-controlled Congress will focus on maintaining personal income tax rates passed under the Tax Cuts and Jobs Act (TCJA) of 2017 — which are set to expire at the end of 2025 — and possibly cutting some corporate taxes further.
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