Mark Zandi, Moody’s Analytics chief economist, joins Brian Sozzi and Brad Smith on Morning Brief to explore what President-elect Trump’s second term may mean for the economy in 2025.
While Zandi acknowledges the current healthy state of the economy and stock market, he focuses his attention on the "storm clouds" that he predicts will take shape in 2025.
In particular, Zandi describes how the broad-based tariffs and mass deportations promised by the incoming Trump administration will likely injure the economy. He explains, "Both policy moves would exacerbate inflationary pressures, put upward pressure on interest rates, and diminish economic growth." He adds, "This is what economists would call a ‘negative supply shock.’"
Regarding other 2025 predictions, Zandi believes that the Fed is "going to sit on their hands" next year. Because the anticipated increase in tariffs and deportations will likely increase inflation, uncertainty will be high in the coming year. This will pose a challenge for the Fed, and the decision to remain still seems like a probable response. “I suspect we’re not going to see any moves by the Fed for most of next year,” Zandi emphasizes.
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