U.S. economy steady as Trump takes hold

The U.S. economy entered 2025 with a steady hand, according to the National Association of Business Economics, a group of the nation’s leading economists, with the chance of a prolonged slowdown falling. 

“The odds of a recession continue to diminish according to panelists, with the downside risks largely tied to uncertainty over the implementation and timing of policy proposals from the new administration” said NABE President Emily Kolinski Morris, CBE, global chief economist, Ford Motor Company, in the group’s January Business Conditions Survey taken from Dec. 30, 2024, to Jan. 13, 2025.

President Donald Trump, who took office a week ago, hit the ground running, rolling out a series of pro-business executive orders tied to making the U.S. more open to cryptocurrency, easing energy restrictions and freezing the hiring of federal workers as his DOGE, Department of Government Efficiency arm, assesses areas to cut waste. 

Additionally, he announced a $500 billion investment from OpenAI, Softbank and Oracle to expand artificial intelligence in the U.S. He is also threatening tariffs against Canada, Mexico and China.

Still, inflation remains a headwind. While 65% of NABE’s economists see prices stable over the next three months, 35% expect price increases, an uptick from 28% polled in October.

The consumer price index last month rose 2.9% annually and 0.4% vs. November. Core CPI, which excludes volatile food and energy, rose 3.2% annually. Inflation is well below its 9.1% peak in July 2022 but still above the Federal Reserve’s preferred 2% goal. 

INFLATION RISES 2.9% IN DECEMBER, IN LINE WITH EXPECTATIONS

President Donald Trump makes a speech via video-conference during the World Economic Forum in Davos, Switzerland, on Jan. 23, 2025. (Halil Sagirkaya/Anadolu via)

TRUMP BLASTS BOFA, REIGNITES DEBANKING CONTROVERSY

Trump, during his remote appearance before the World Economic Forum marking his return to office, blamed the Biden administration for high inflation. 

“Over the past four years, our government racked up $8 trillion in wasteful deficit spending and inflicted nation wrecking energy restrictions, crippling regulations and hidden taxes like never before. The result is the worst inflation crisis in modern history, and sky-high interest rates for our citizens and even throughout the world, food prices and the price of almost every other thing known to mankind went through the roof,” Trump told attendees in Davos, Switzerland. He also took a jab at Fed Chair Jerome Powell. 

“I’ll demand that interest rates drop immediately. And likewise, they should be dropping all over the world. Interest rates should follow us,” he said. 

Fed Chairman Jerome Powell speaks during a press conference at the Federal Reserve on Dec. 18, 2024, in Washington, D.C. (Alex Wong / Getty Images)

Policymakers are expected to leave rates unchanged at the conclusion of the two-day meeting Wednesday, according to the CME’s FedWatch Tool, which tracks the probability of rate moves. That will keep the Federal Funds Rate between 4.25%-4.50%. 

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On Thursday, GDP for the fourth quarter is seen rising 3%, in line with the 3.1% reported in the third quarter.