A National Association for Business Economics (NABE) study suggests that the chances of a U.S. recession in 2025 are decreasing. Experts point to the economy’s stable position as it negotiates a challenging global environment, even while inflation and monetary policy continue to be issues.
Economists’ optimism on the nation’s economic future has increased, according to NABE’s most recent business conditions survey. According to the study, which was carried out between late December and mid-January, stabilizing inflation and strong policy measures have significantly reduced recession worries.
Economic Stability Supported by Easing Inflation Pressures
The U.S. economy entered 2025 on stable ground, as NABE economists cited a diminishing probability of a prolonged slowdown. Emily Kolinski Morris, NABE President and global chief economist at Ford Motor Company, noted : “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.”
Inflation, a persistent concern throughout 2024, has shown signs of easing. The Consumer Price Index (CPI) rose 2.9% annually in December, a significant decline from the 9.1% peak recorded in mid-2022. Core CPI, which excludes volatile food and energy prices, remains above the Federal Reserve’s preferred 2% target but has moderated to 3.2% annually.
Despite this progress, some headwinds persist. According to the survey, 35% of respondents expect price increases over the next quarter, compared to 28% in October. Policymakers, including Federal Reserve Chairman Jerome Powell, are expected to maintain current interest rates at 4.25%-4.50% to balance economic growth and inflation control.
US : New Administration’s Policies Shape Economic Outlook
The outlook for 2025 is also shaped by policy shifts under President Donald Trump‘s administration, which began implementing measures aimed at bolstering business and technological development. Among the initiatives are pro-business executive orders, a $500 billion investment in artificial intelligence by Oracle, SoftBank, and OpenAI, and the easing of energy restrictions.
However, these moves come amid heightened trade tensions, with proposed tariffs on Canada, Mexico, and China adding an element of uncertainty. During a recent appearance at the World Economic Forum, President Trump criticised previous energy policies and inflationary pressures, pledging to demand global interest rate reductions to stimulate growth.
While the administration’s initiatives aim to enhance domestic economic activity, analysts caution that their success depends on swift and effective implementation. NABE panellists emphasised that uncertainties surrounding policy timing could impact business confidence and investment decisions in the coming months.
As the Federal Reserve prepares for its next policy meeting, the NABE survey projects steady economic growth, with fourth-quarter GDP estimated to rise by 3%. This follows a similarly strong performance in the third quarter, reflecting resilience amid challenges.
The trajectory of the U.S. economy in 2025 will be determined by how well global market circumstances, efficient policy implementation, and inflation stabilization are balanced. The upcoming months will be critical in evaluating whether the nation can maintain its present momentum and prevent a slump, as economists’ optimism continues to rise.
