New AMG Report: Expect That Soft Landing in 2025

• 3 min read

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Anticipate solid, steady economic growth of around 2%, according to AMG's three-year outlook.

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The U.S. economy is operating well and without major imbalances, although the labor market is a tad weak and business and residential investment remains affected by high interest rates. These soft spots might lead to a few months of slower growth in 2025, but a recession remains unlikely. Any output losses are likely to be recovered in 2026 when the nation’s GDP probably resumes growing in line with its long-term trend rate of slightly above 2%.

That’s the most likely scenario, or base case, contained in AMG’s new three-year Economic Outlook, which should serve as a guide for clients to reposition their portfolios for the months ahead. The report also contains six alternative scenarios that could be possible. The scenarios then inform AMG’s projections for returns on different asset classes and are used to help determine the best portfolio allocations for clients based on their risk tolerance.

Preparing the outlook for 2025-27 proved more challenging than usual. In addition to the usual demands of predicting the likely trajectory of the economy, AMG had to make assumptions about the likely policies of the incoming administration.

In the base scenario, “Soft Landing,” AMG assumes that most of President Trump’s campaign promises are implemented, but only to a limited extent. Tax cuts mostly feature an extension of the Tax Cuts and Jobs Act, with no major changes to the corporate tax rate or federal spending. While a mix of tariffs is likely to be implemented, they are likely to be targeted in nature and have a limited impact. Some deregulation is also likely to occur but without a fundamental transformation of the U.S. economy.

Given these assumptions, AMG’s outlook for the U.S. economy in the coming years is mostly benign, with growth likely to remain solid and steady.

Internationally, most economies should normalize somewhat in the coming two years. Growth in developed nations likely will return close to their long-run trends, with GDP growth in the Euro Area, United Kingdom and Japan probably accelerating to around 1.5% a year in 2026 and beyond. China likely will continue resolving its real estate crisis through a range of piecemeal stimulus measures, which would leave its GDP growth at around 4.5% a year.

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This information is for general information use only. It is not tailored to any specific situation, is not intended to be investment, tax, financial, legal, or other advice and should not be relied on as such. AMG’s opinions are subject to change without notice, and this report may not be updated to reflect changes in opinion. Forecasts, estimates, and certain other information contained herein are based on proprietary research and should not be considered investment advice or a recommendation to buy, sell or hold any particular security, strategy, or investment product.

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