Economic Growth Data Indicates Potential for Soft Landing in 2025
The market is showing resilience amid volatility due to tariff concerns, geopolitical tensions, and inflation pressures. Key economic indicators are strong:
- Manufacturing data is positive; ISM manufacturing PMI and Empire State Manufacturing Survey exceed expectations.
- January's ISM services PMI remains above 50, indicating growth.
- Retail sales dipped as expected but remain stable.
- Non-farm payrolls increased, with slight uptick in initial jobless claims. Unemployment stabilizes and wage growth moderates.
The Conference Board forecasts US GDP growth at 2.3% for 2025, down from 2.8% in 2024, and global GDP growth at 3%. Proposed policies may hinder growth and keep inflation elevated, suggesting a cautious Fed approach. Chicago Fed President expresses optimism about achieving a soft landing.
Recent FOMC minutes highlight concerns regarding federal policy changes affecting inflation reduction. A pause on interest rate cuts is anticipated unless significant economic shifts occur. The Fed will consider easing monetary policy only if labor conditions worsen or inflation decreases faster than expected.