What does 2025 have in store for finance? The crystal ball we got on Temu didn’t tell us, but it did have a USB-C charging port. And so, our devices fully charged, we consulted the next best thing to a crystal ball: economic forecasts.
With the caveat that the future is unknowable and predictions should be taken with a grain of salt, there seems to be a general consensus on Wall Street that the coming year could be one of solid growth. The S&P 500 could grow by more than 10%, according to a Forbes roundup of bank forecasts. Expectations for US GDP growth seemed to coalesce around or above 2% in 2025, as predicted by the Conference Board, S&P Global, Goldman Sachs, Bank of America, RBC Capital Markets, and a consensus forecast from Bloomberg. The OECD, which also anticipates “very robust” US growth of 2.4%, forecasts global GDP to reach 3.3%, according to the Wall Street Journal.
Fed ahead. How the Federal Reserve leads us through this dance is a little less certain, though many expect the central bank to slow its pace of rate cutting to offset the inflationary potential of policies that incoming president Donald Trump is pushing for.
“The central bank is likely to pause its rate plans through at least the first quarter of 2025,” S&P Global predicts. RSM expects the Fed “to slow its pace” to a quarter-point cut each quarter. That would put the Fed’s benchmark rate at 3.5% by the end of 2025 instead of the 2.9% the Fed projected in September.
On the other hand…The OECD’s prediction of a rosy future for US growth, the Journal reported, “assume[s] no changes in trade policies.” You may have heard that Donald Trump has planned a few such changes. How you and other finance leaders adjust your operations and strategy in response to the tariffs, and how they reshape trade and investment more broadly, will be key focuses of our coverage in 2025. Are you frontloading shipments, raising prices, remapping your supply chain, applying for exemptions, or all of the above, plus more?
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Tax. Republicans waited out Democrats’ control of the Senate and White House for this moment: With total legislative control, they’ll be able to renew parts of Trump’s 2017 Tax Cuts and Jobs Act, including corporate deductions on pass-through income, capital investment depreciation, and business interest, as well as a bunch of deductions for individuals. That’s just the beginning. Trump has also proposed “lowering the corporate tax rate to 15 percent for domestic production,” as the Tax Foundation notes in its comprehensive rundown of the incoming agenda, as well as “allowing auto loan interest to be deductible.”
If you’re (understandably) overwhelmed by how to approach these tax reforms, we’ve got just the story for you.
Deals, deals, deals. Could 2025 be a year of resurging M&A activity? This year has been on pace to beat 2023, though the frequency and size of deals are still nowhere near the heady days of 2021, as KPMG noted. The firm expects that more tech deals will bloom next year, “[citing] a robust equity market, improved financing options and a renewed focus on growth,” S&P Global reported, following a midyear survey of corporate and private equity professionals that found that 52% and 58%, respectively, hope to get a big deal done in 2025. EY-Parthenon forecasts a 10% increase in deal volume next year in the US.
Dealmakers are so ready for this. “Trump’s return to the White House is seen fueling a dealmaking revival,” Reuters reported, citing data from Coalition Greenwich that shows 2025 could become M&A bankers’ “second-best year in at least two decades.” One potential wrinkle? Big tech M&A, since Trump’s pick for the top antitrust role at the Justice Department is “viewed as an antitrust hawk among Washington tech skeptics,” according to Reuters.