US growth resilient into 2025 with sticky inflation, eventual rate cuts, and tariff-driven FX effects

US real and nominal GDP have been stronger than expected—driven by consumer demand, wage gains, and tech-led business investment—and are likely to cool modestly but remain above recent averages in 2025; inflation is expected to remain sticky around 2.5–3%, the Fed is likely to deliver more rate cuts than markets currently price, and tariffs show statistically significant effects on PCE and the effective exchange rate.

“Using Final Demand‑Intermediate Demand (FD‑ID) price indexes for 2020–2025, Japan experienced larger upstream (energy and raw materials) price increases and greater cross‑stage dispersion than the United States, while downstream goods prices rose less than in the U.S.; compared with the pre‑2020 period, Japan’s goods price pass‑through to downstream stages intensified across many sectors but remained relatively muted versus the U.S.”

— Bank of Japan：RSS

“Pettis's claim that China's large surpluses suppress global demand rests on a false ceteris-paribus assumption: other countries adjust policy (monetary and fiscal), and historical unemployment trends during China Shock 1.0 and after 2021 show no global demand shortfall. Even at the ZLB, several monetary tools and fiscal policy can offset external demand weakness.”

— Marginal REVOLUTION

“Despite sizable 2025 cost pressures from higher insurance, utilities, and tariffs and notable price increases—especially in manufacturing—firms’ year-ahead inflation expectations moderated to 3.0 percent and longer-term expectations remain anchored at 3 percent, suggesting limited risk of expectation-driven persistent inflation.”

— Liberty Street Economics