The US Quarterly Economic Forecast Came Out: From Rising Inflation to New Global Policies

Upon President Trump’s inauguration on January 20th, the world has been on edge. Dramatic changes have been introduced, with an agenda that saw 92 consecutive orders within the first 60 days. Economic policies have dominated public discourse. Massive reductions to government expenditures and tariff threats spark debate and take up the front pages of all major news outlets. This surge in media attention mirrors the “Trump Bump” that marked media on his last presidency – when publications like The New York Times added nearly 5 million digital-only subscribers over four years. On March 19th, 2025, the Federal Reserve released its Quarterly Economic Forecast, providing a lens into the current and future economic climate, and the potential impacts of these new policies.

The Federal Reserve’s March 2025 economic projections indicate a slower-than-expected GDP growth at 1.7% for 2025, which raises recession risks. The likelihood of a recession rose from 23% in January to a staggering 36%, the highest level in six months, according to a March CNBC Fed Survey. Many are pointing fingers to tariffs, as the top threat to the US economy, causing political turmoil. Other economic policies from the Trump Administration have also been subject to heated debate on the sharp revision from 2.1% in GDP growth earlier in the year. In response, President Trump criticized the Federal Reserve's decision to maintain current interest rates and advocated for immediate rate reductions. He argued that lowering rates promptly would better prepare the economy to absorb the effects of the escalating tariffs. The Fed designated plans for two potential interest rate cuts later in the year, which would reduce the cost of loans to prompt stronger economic activity.

The labor market is also showing signs of weakness, with the unemployment rate projected to rise to 4.4% by the end of 2025, up from 4.3% in previous estimates. Slowing job growth, combined with business uncertainty from tariffs, has fueled concerns about labor market instability. Some industries, particularly manufacturing and trade-related sectors, are experiencing hiring slowdowns, while others, such as technology and healthcare, continue to expand.

The Federal Reserve projects a 2.7% inflation rate. According to the U.S. Bureau of Labor Statistics, gasoline and airline fares declined, but energy, food, and medical costs remain elevated. Rising prices strain consumers, weakening purchasing power and slowing consumption, which increases economic uncertainty. If inflation remains high, the Fed may be forced to delay or limit rate cuts, as lowering rates too soon could risk prolonged inflation and financial instability.

In conclusion, the current economic condition and future predictions highlighted by the US Quarterly Economic Forecast show a sharp reduction in predicted GDP growth, a higher inflation rate, and weakening labor market progress. Discourse of a potential recession continues to spark across media outlets, and these recent metrics raise questions of the viability of new trade policies and shifting monetary strategies. As President Trump launches into his second term, the debate remains over how tariffs and interest rate cuts will impact long term economic stability, and what is best to balance growth, inflation, and unemployment.

Works Cited: U.S. Bureau of Labor Statistics. “Consumer Price Index Summary.” Bls.gov, U.S. Bureau of Labor Statistics, 12 Feb. 2025, www.bls.gov/news.release/cpi.nr0.htm.

Robb, Greg. “Fed Sees Higher Inflation and Slower U.S. Economy due to Uncertainty Tied to Trump Tariffs.” MarketWatch, 19 Mar. 2025, www.marketwatch.com/story/fed-sticks-with-projection-of-two-interest-rate-cuts-this-year-despite-growing-uncertainty-about-the-outlook-98144452.

The Conference Board. “The Conference Board Economic Forecast for the US Economy | the Conference Board.” Www.conference-Board.org, 21 Mar. 2024, www.conference-board.org/research/us-forecast.

“March 19, 2025: FOMC Projections Materials, Accessible Version.” Federalreserve.gov, 2025, www.federalreserve.gov/monetarypolicy/fomcprojtabl20250319.htm.

Liesman, Steve. “Slower Economic Growth Is Likely Ahead with Risk of a Recession Rising, according to the CNBC Fed Survey.” CNBC, 18 Mar. 2025, www.cnbc.com/2025/03/18/slower-economic-growth-is-likely-ahead-with-risk-of-a-recession-rising-according-to-the-cnbc-fed-survey.html.

Sor, Jennifer. “Interest Rates: 5 Things to Know about Trump’s Feud with the Fed.” Business Insider, 20 Mar. 2025, www.businessinsider.com/interest-rates-fed-inflation-trump-tariffs-rate-cuts-trade-war-2025-3.

Leonhardt, Megan. “The Fed Pencils in 2 Rate Cuts. Anything Could Happen.” Barron’s, Dow Jones & Company, Inc, 19 Mar. 2025, www.barrons.com/articles/federal-reserve-rate-cuts-inflation-c530054d.