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Tired of economic doom and gloom? Dire AI jobs predictions getting you down? Concerned that the Big Beautiful Bill will turn out to be a Big Bearish Bust?
The keynote speakers at the AICPA’s annual Engage conference had a different take that might give you some hope going into the back half of 2025.
US economy still solid despite tariff volatility: The first six months of 2025, as we all know, were an economic roller coaster. The threat of tariffs led consumers and businesses alike to front-load their spending, and then to put it on pause. Dana Peterson, chief economist at the Conference Board, said that led to “very weak numbers in the first quarter. The second quarter is going to be really wacky,” she said, “because you’re going to see a collapse of imports,” which will boost GDP.
But it’d be a mistake to make too many predictions about the latter half of 2025 based on its anomalous first half, Peterson cautioned. “The truth of the matter is that you can’t believe the numbers from the first or the second quarter, because they’re dramatically affected by the tariff announcements,” she said.
She anticipates prices to rise in the second half and for some growth in unemployment, but she doesn’t see a recession on the horizon, as the “fundamentals of the US economy” are still solid. “Consumers have money, they’re working,” she said. “Wages are rising in real terms, meaning after inflation.” She put the odds of a recession at “20% to 30%, and that’s pretty low.”
But don’t expect the administration to give up on tariffs, or on its efforts to restore manufacturing to the US. Gary Cohn, vice chairman of IBM, who was director of the US National Economic Council during the first Trump administration, said, “If you want to understand what the President’s thinking at any moment, go pull out a Norman Rockwell paintingand look at the guy with overalls carrying a lunch box, going to work, with a steam locomotive going by with a smokestack billowing. That’s how he sees America.”
Jobpocalypse (not) now: Peterson also doesn’t think we’ll see huge job losses, whether due to economic swings or AI. CEOs are telling the Conference Board that while they’re not doing much hiring, they’re not planning layoffs, either, she said. “The unemployment rate has a cap because companies, even those that are very closely exposed to tariffs,” are reluctant to lose workers, she said. Baby Boomer retirements will put experienced staff in shorter supply.
And Peterson’s not all that worried about AI. The Conference Board’s research shows, contra Amodei, that “most jobs are not in the quadrant where AI is going to get rid of you,” she said, but “in the quadrant where AI is going to enhance what you do…Many white-collar jobs,” she added, “are actually going to be made better and more enjoyable thanks to AI.”
What will (and won’t) be in the BBB: It’s highly unlikely that the “One Big Beautiful Bill” will pass in its current form. In fact, Peterson expects so much change that she advises companies to wait for the bill to pass the Senate before doing any scenario planning around it. (That could be a while: Cohn believes Congress “will take every minute they have” before passing the bill.)
Both Cohn and Peterson foresee the Tax Cuts and Jobs Act being extended. If it isn’t extended, Peterson said “you may wind up in a recession” because many people’s taxes will go up, their income will decline, and they’ll pull back on spending as a result. “I don’t think any politician, Republican or Democrat, wants a big hike for consumers in terms of taxes,” Peterson said.
The BBB is largely focused “on making sure consumers don’t have any change in their income next year,” Peterson said. To that end, she doesn’t think provisions that will affect income, such as cuts to Medicaid and childcare programs, will pass, or at least not in their current form. Too many of these programs benefit middle- and lower-income constituents living in red states for GOP senators to feel comfortable cutting them, she predicted.
Cuts to IRA and CHIPS Act programs might also not survive the reconciliation process, for much the same reason. These types of large stimulus programs had a noticeable impact on GDP growth from 2022 through 2024, Peterson said. “If you take that away, you’re going to have less growth,” she said. That includes long-term growth, which would be hampered by cuts to infrastructure spending, she added.