May 2. 2025

The world  has turned topsy-turvy as tariffs are imposed, then postponed and, perhaps, reimposed.  Nobody knows what to expect.  We are all reacting to the latest events and making guesses about what happens next.

We suspect that much of the current pessimism is overdone.  We believe economists and investors have become overly worried.

First quarter GDP declined 0.3% as  imports surged and subtracted a whopping 4.8% from growth in that quarter.  But as more goods are imported in the first quarter, the fewer will need to be imported later which will boost GDP growth in the quarter that occurs.

For that reason we expect GDP growth in the second quarter of 2,5% and 1.9% GDP growth in 2025.

Given the GDP forecast above, we expect the unemployment rate to relatively steady at the 4.3% mark at the end of 2025.

The core CPI inflation rate is currently 2.8%  We expect  the core CPI to edge upwards to 3.1% at the end of 2025.

We expect the funds rate to remain at 4.3% at the end of 2025 and drop to the 4.1% mark in mid-2026.

Stephen Slifer

NumberNomics

Charleston, SC