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As the calendar arrives at the new year, here are 10 of our top forecasts for 2025, which figures to be nothing if not full of surprises.
1. The economy will stay relatively robust
The economy will stay relatively robust, with GDP growth downshifting from 2.8% in 2024 to a still-respectable 2.4% in 2025. Note that that pace likely exceeds the long-run potential for growth, which appears closer to 2%. Slow growth in the workforce should keep GDP gains moderate for the long haul, but 2025 will outperform. But, a full-blown trade war could slow growth. We are not expecting one, and think Donald Trump will use the threat of big tariffs to win concessions from trade partners while imposing targeted duties. But there is a risk that other countries retaliate and tit-for-tat tariffs spiral out of control this year.
2. Inflation will not be completely curbed in 2025
The headline inflation stats are likely to look promising early in the year. But, in the second half, look for them to perk up again. That means few interest rate cuts ahead from the Federal Reserve, which won’t have the leeway to cut with inflation too high.
3. Look for the dollar to remain strong in 2025
Look for the dollar to remain strong, and possibly gain even more in 2025. The U.S. economy will keep growing faster than most advanced economies, and fairly elevated interest rates will further support the buck vs. other currencies. If Trump does impose sweeping tariffs, that would likely push the dollar still higher.
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4. Crypto speculation will further intensify
Cryptocurrency usage and speculation will further intensify in 2025, with the Securities and Exchange Commission (SEC) set to approve several new crypto ETFs (exchange-traded funds) which make it easier for retail investors to dabble in crypto. More investors will hold Bitcoin via individual brokerages and institutional accounts, too. The growing adoption of Bitcoin should underpin further price gains. However, there figures to be plenty of volatility, too. Eventually, as more people hold Bitcoin through various vehicles, it should start to stabilize and trade more like a stock.
5. The housing market will see some progress
The housing market won’t heal in 2025, but it will see some progress. Mortgage rates will ease slowly as the year unfolds, but that won’t be enough relief to bring many buyers into the market. What will help is that supply should improve as a few more owners list their homes for sale, which is a step in the right direction. As a result, price gains should slow from 2024’s pace, though big price reductions outside of the weakest markets are unlikely. Folks thinking about selling their home should expect fewer offers, which again points toward moderation in price increases after the rapid run-up since the pandemic. Overall, house sales figure to remain very low.
6. Who will have the worst job in Washington? Speaker Mike Johnson.
The Louisiana Republican will be presiding over an extremely thin House majority (with possibly just one vote to spare early in the year, before some vacancies are filled). The House GOP is fractured, and some of Johnson’s biggest detractors are members of his own party, notably hard-line conservatives. Meanwhile, the pressure will be on to get bills through the House, now that the GOP has the Senate and White House. Johnson will be forced to rely on Democratic votes to pass some major bills, due to the GOP’s slim majority. Because of this, he’ll have to make concessions to the Democrats, as he did in 2024. This tactic infuriates conservative colleagues. Most of them were willing to give him a pass initially after his shocking elevation from backbencher to speaker in October 2023. But Johnson’s honeymoon is long over.
7. Senator Rand Paul will be a thorn in Trump's side
One of President-elect Trump’s biggest thorns in Congress in 2025: Republican Senator Rand Paul (KY). The libertarian-leaning lawmaker has never been one to bow to his party’s leadership directives without sufficient cause and cares little what colleagues think of him, even if he holds up legislative priorities. Paul, a staunch fiscal hawk, will have a powerful perch come January as chairman of the influential Senate Homeland Security Committee. He’s been critical of the price tag for Trump’s border security proposals and has voiced concerns over how Trump’s plan to use the military for deportations will go over with voters.
8. AI and Windows 10 will drive firms to upgrade computer stock
All signs point to a great refresh of PCs among businesses of all stripes. Two reasons: A Windows 10 support deadline and the rush to embrace AI. Microsoft ends Windows 10 support on October 14, 2025, which will prompt many firms, government agencies and other organizations to upgrade or risk security problems. And to better harness generative artificial intelligence, companies will want AI PCs, which contain a special neural processing unit to run AI models on the devices. AI PCs enable quicker response times and decreased costs, along with better privacy and security, since companies don’t have to use internet-based AI tools and services. You can even tap AI chatbots and tools offline. Businesses are primed for upgrades since 30% of the PCs in use are four years old or older — too old to run AI effectively.
9. Expect 2025 to be another banner year for American liquefied natural gas
This is due in part to a series of new export facilities set to come online next year, including Corpus Christi LNG Stage 3 in Texas and Plaquemines LNG in Louisiana. Of the 27 million metric tons of new global LNG supply expected in 2025, nearly 90% will come from North America. The U.S. is the world’s largest exporter of LNG. This has the potential to put significant pressure on domestic gas supplies.
10. The Ukraine-Russia conflict is likely to edge toward some sort of resolution
Odds for some sort of cease-fire in the Ukraine-Russia conflict have risen because of Donald Trump’s election. The president-elect’s plans aren’t entirely clear, but he has promised to restore relations with Russia and seems inclined to end or scale back aid to Ukraine as a means to force Kyiv to the negotiating table. Europe aims to step up if Washington tries to take a step back, but the Continent may be too politically divided or lack the resources necessary to replace the U.S. Either way, don’t expect a durable end to the conflict. While both countries have dramatically scaled back their definitions of victory over the previous year, Kyiv and Moscow are still far apart on acceptable terms for a cease-fire. Even in the event of an agreement, violations could quickly result in the resumption of fighting.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.
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