Economists expect faster growth, but weaker job gains, through 2025

The U.S. economy shows signs of improvement despite challenges such as tariffs and inflation, according to a recent analysis by the National Association for Business Economics (NABE). Their latest forecast predicts a GDP growth of 1.8% in 2025, up from the previous estimate of 1.3%. This positive outlook is supported by a survey of 40 economists who provided insights on labor growth, inflation, and other key metrics for the coming year.

Despite concerns about rising inflation and a slowdown in the labor market, the economy has been resilient. Economic activity rebounded after a sluggish start in 2025, with an increase in business investment contributing to the overall growth. The Federal Reserve’s decision to lower interest rates is expected to further support economic expansion, with NABE anticipating additional rate cuts by the end of the year.

However, there are still areas of weakness in the economy. Job growth has slowed in recent months, leading to an increase in long-term unemployment rates. Layoffs have also been on the rise, with nearly 950,000 jobs cut so far this year. Looking ahead, NABE predicts a fragile job market with average monthly payroll gains expected to decrease.

Inflation remains a concern, with prices expected to rise at a rate of 3% for the remainder of 2025. Tariffs are contributing to higher consumer prices, although the impact is projected to be less severe than previously thought. Economists anticipate inflation to moderate to 2.5% by the end of 2026.

Despite these challenges, NABE does not foresee a recession in the near future. Most economists surveyed by the group believe the likelihood of a downturn in the next 12 months is between 20% and less than 40%. This cautious optimism suggests that the U.S. economy is on a positive trajectory, with measures in place to mitigate potential risks and support continued growth.