FORECAST 2025— A WELCOME ECONOMIC REBOUND
By Phillip M. Perry
Healthy economic growth will help bolster business profits in 2025. Relief from crippling inflation and a reduction in interest rates will improve consumer sentiment, and infrastructure support from the
federal government will strengthen the all-important manufacturing and construction sectors. While businesses will benefit from tax relief and a looser regulatory environment by the Trump administration, proposed tariffs may reignite inflation and increase the cost of goods sold.
Clearing skies with a chance of showers. Businesses can look forward to a gradually improving operating environment in 2025, thanks to lower interest rates, moderating inflation, and steady if unspectacular growth in the nation’s overall economic activity.
“We look for real GDP growth of 2.5 percent in 2025,” said Bernard Yaros Jr., Lead U.S. Economist at Oxford Economics (
oxfordeconomics.com). (Gross Domestic Product, the total value of the nation’s goods and services, is the most commonly utilized measure of economic growth. “Real” GDP subtracts the effects of inflation).
Te good news is that the 2.5 percent boost is not far off what economists peg as the nation’s “natural growth rate”— one that supports business activity and maintains full employment. And reduced volatility in the GDP growth pattern in recent years suggests the nation is on a glide path to a so-called “soft landing,” avoiding a recession after a lengthy inflationary binge. (See Sidebar 1 for figures.)
Despite its positive nature, the GDP figure for 2025 is slightly lower than the 2.7 percent anticipated when 2024 numbers are finally tallied. Tat’s because the nation is
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in a so-called “late-stage expansion,” characterized by a tendency to slow down while maintaining sufficient force to invigorate commercial operations.
Fair Winds
In 2025, business owners can look forward to a decline in both interest rates and inflation—two bugbears that have drained profits in recent times. “We anticipate a federal funds interest rate of 2.75 percent by the end of 2025, down from a recent 4.75 percent,” said Yaros. “And we look for inflation to average 2.2 percent in the final quarter of 2025, which will be within spitting distance of the Fed’s 2 percent target.” Tat’s an improvement from the 2.5 percent inflation level toward the end of 2024. (Tese figures represent the Federal Reserve’s preferred measure of inflation: the “core personal consumption expenditure deflator [PCED]” which strips out volatile food and energy prices).
Relief from the costs of interest and inflation will help fatten the bottom lines of businesses everywhere. “We anticipate corporate profits will increase 9.6 percent in 2024 and 9.0 percent in 2025, up from their 6.9 percent gain in 2023,” said Yaros.
TPI Turf News January/February 2025
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