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Economists dial back U.S. growth forecasts amid Trump uncertainty

Pedestrians cross California Street in the Chinatown neighborhood of San Francisco, California, US, on Thursday, March 27, 2025. (David Paul Morris/Bloomberg)
By Mark Niquette and Dana Morgan Bloomberg

Economists dialed back their expectations for U.S. growth this year, envisioning softer consumer spending and more limited capital investment amid mounting uncertainty created by the Trump administration’s ever-evolving trade policy.

Gross domestic product is now set to grow 2% in 2025, according to the latest Bloomberg survey of economists, down from the 2.3% estimate in last month’s poll. Their projection for first-quarter growth was marked down a full percentage point to 1.2%.

Inflation, meanwhile, will stay above the Federal Reserve’s 2% goal – with a key gauge finishing the year at 2.8% instead of the previous 2.5% projection – and keep the central bank cautious about additional interest-rate reductions. Fed officials last week held their benchmark rate steady for a second straight meeting while marking down their forecasts for growth and boosting estimates of inflation.

“The economy has started 2025 on a weak footing,” said ING economist James Knightley. “The ‘negatives’ from President Trump’s policy thrust of government austerity and trade protectionism have taken an early toll via weaker consumer confidence and spending at the same time as importers look to front run the threat of tariffs.”

Respondents expect a significant slowdown in the growth of business fixed investment in the second quarter before a modest re-acceleration in the second half of the year. Projections for import growth in the first quarter were marked higher to 12.9%, from 4.7% last month, after recent data showed a surge reflecting stockpiling ahead of tariffs.

Consumer sentiment surveys from the Conference Board and University of Michigan have been dismal of late as households fear a resurgence of inflation from tariffs on imported goods. Surveys of businesses also show optimism and capital spending intentions have been receding after an initial surge following President Donald Trump’s election victory in November.

Forecasters now put the chances of a recession in the next 12 months at 30%, up from 25% in last month’s survey. The poll of 85 economists was conducted March 21 to March 26.