Global Economy on Track for Soft Landing in 2025

Economic growth data suggests that the global economy is on track for a soft landing, with the U.S. economy expected to grow at a steady pace in 2025. The Conference Board projects real U.S. GDP to come in at 2.3% in 2025, a decline from 2.8% in 2024, while global real GDP is expected to show 3% growth for the year.

The U.S. economy started 2025 on strong footing, with manufacturing and services sectors both showing signs of growth. The ISM manufacturing PMI and the Empire State Manufacturing Survey both came in better than expected, while the ISM services PMI remained healthily above 50. Retail sales saw their expected January dip but are still in a Goldilocks range. On the labor front, non-farm payrolls were up solidly, and initial jobless claims ticked up only slightly in recent weeks. Unemployment has stabilized, and wage growth has started to moderate.

Chicago Fed President Austan Goolsbee recently expressed optimism about a soft landing, and minutes from the FOMC's most recent meeting reflect a cautious approach to monetary policy. Staff noted elevated uncertainty regarding the scope, timing, and potential economic effects of possible changes to trade, immigration, fiscal, and regulatory policies. Trade and immigration specifically could impact progress being made on inflation reduction. Several participants also said it could be appropriate to pause or slow balance sheet runoff until Congress reaches a debt ceiling resolution.

The economic data situation remains positive, and unless there are major declines in growth, a soft landing is not out of the question. The Fed is likely to remain on hold until inflation trends much lower, but the current economic data suggests that the global economy is on track for a soft landing in 2025.