Americans expect to be better off in 2025

What’s new

Americans expect to have fuller wallets by 2025, according to a new study from WalletHub.

Why it’s important

The US economy has experienced the most robust recovery from the coronavirus pandemic among major developed countries. As things stand, things look considerably better than they did just a few years ago: annual inflation is approaching the Federal Reserve’s 2 percent target without triggering a recession, with recent interest rate cuts helping in that direction, while consumer spending and the employment rate remain relatively strong.

While markets reacted positively to the election of Donald Trump in November, with experts predicting further growth on a strong basis, there remains some uncertainty about some potential fiscal policies earmarked for the incoming Republican administration, such as tariffs, mass deportations, as well as corporate . and personal tax relief.

What to know

According to the survey conducted with 220 nationally representative respondents, 66 percent said they believed 2025 would be better for their wallets than 2024, while 20 percent indicated they think they will be worse off and 14 said they expected their financial status to remain the same.

Of those making financial and money-based New Year’s resolutions, 41 percent said they wanted to save more and 21 percent said they wanted to spend less. Twenty percent said they would like to earn more money this year, while 11 percent said they would work more to pay off existing debt.

Yet anyone who wants to be better off will face wider economic consequences. Inflation is by far the biggest concern, with 56 percent of Americans citing it as their top financial concern heading into the new year.

Other potential fiscal downturns, such as a recession, stock market decline or a real estate downturn all scored below 20 percent, while the prospect of losing a job and becoming unemployed was a worrying factor for 8 percent.

What people have said

David Mericle, US Chief Economist at Goldman Sachs Research: “The U.S. economy is in a good place. Recession fears have subsided, inflation is heading back toward 2 percent, and the labor market has recovered but remains strong.”

Gregory Daco, EY-Parthenon chief economist: “The U.S. economy remains on a solid growth path underpinned by healthy employment and income growth, robust consumer spending, and strong productivity momentum that is helping to tame inflationary pressures. We expect this positive momentum to continue into 2025, enabling the Fed to pursue gradual, but careful, political recalibration.”

What’s next

Outlooks from expert bodies indicate that there is general optimism for the US economy in the coming year. On the plus side, Goldman Sachs has said there is a low 15 percent chance of a recession in 2025 and that the economy will grow by 2.5 percent annually.

However, analysts at Deloitte have indicated that while the economy is expected to grow in 2025, the outlook is uncertain due to the potential for “damaging tariffs” as well as “significant deportations” and “sweeping cuts in public spending”, even if it does. do not expect such policies to be “implemented in their most maximalist forms.” Both have indicated that inflation is likely to remain above 2 percent throughout 2025.