As we near the end of 2024, we thought it would be helpful to summarize the current state of the U.S. economy and discuss what we feel are important data points to watch in 2025. Fourth-quarter GDP is tracking at a solid +3.3% according to the Atlanta Federal Reserve’s GDP now forecast (as of 12/9/24). This represents solid growth, slightly above long-term potential. The unemployment rate stands at 4.2%—still low by historical standards but up from 3.4% earlier in 2024.

Inflation has cooled from over 9% in mid-2022 to 2.7% CPI and 2.3% PCE, the Fed’s preferred measure. Still, those figures remain above target and have been stuck at these levels for several months. Meanwhile, consumer net worth is up 11% year-over-year, helping sustain solid spending. The Federal Reserve has cut interest rates by 0.75%, and another 0.25% cut is expected this week—a process they’ve called a “recalibration.”

Uncertainty has increased about the pace of future cuts. Overall, the economy begins 2025 on solid footing.

Given the upcoming change in the presidential administration, there are several factors to monitor, with tariffs being one of the most significant. Incoming President Trump appears likely to use tariffs as a strategic tool. While the long-term impact is unclear, we recommend reading this insightful article from J.P. Morgan for a breakdown of how tariffs could influence future inflation scenarios. As the report outlines, retaliatory measures and today’s elevated inflation starting point may lead to more pronounced effects than in 2018.

Key data points to watch in 2025:

• The monthly jobs report
• The three monthly inflation readings (CPI, PCE, and PPI)
• Any new policy developments on trade and tariffs

With the Fed now balancing inflation and employment rather than focusing solely on price stability, policy dynamics have grown more complex.

Read the full J.P. Morgan analysis on tariff scenarios and inflation impact

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Advisory services provided by Venture Visionary Partners, LLC (“VVP”). VVP and J.P. Morgan are separate, nonaffiliated entities.