Economic Forecast by Kiplinger: Moderated Expansion Anticipated for Near Future
In the second quarter of 2025, the U.S. economy posted a robust annualized growth rate of around 3%, according to Kiplinger's Economic Outlook[1]. However, this growth was largely driven by trade factors, with a significant reduction in imports boosting the headline GDP figure[1].
Core GDP, excluding trade and inventories, showed weaker growth at 1.2%, indicating a moderation in economic momentum[1]. This suggests that while the near-term annual growth rate appears strong, underlying growth for the year may be slower.
The tariffs imposed in the first quarter have resulted in an effective tariff rate of around 15% on imports across all goods[2]. Despite this, the impact on the Consumer Price Index (CPI) has not been substantial so far, with higher tariffs being imposed on common goods imports such as home furnishings, toys, and sports equipment[2].
Wage growth and labor market activity are expected to slow down through 2025, potentially tempering future growth rates[3][4]. Annual wage growth is projected to dip to about 3.5% by the end of 2025, and job growth is moderating with some volatility in government hiring[3][4].
Consumer sentiment remains low, particularly among Democrats and independents[5]. Consumer spending was subdued in the second quarter, with weak consumption of services and declines in both housing and non-residential construction[5].
Foreign tourism is likely to be down, potentially subtracting a tenth of a point from GDP growth over the course of the year[6]. Business purchases of equipment held up in the second quarter, but there are expectations of price increases on motor vehicles later in the year as inventories of pre-tariff imported vehicles run low[6].
Looking ahead, the sub-2% growth trend is expected to continue into 2026, with third- and fourth-quarter growth reverting to a more subdued 1.3%[7]. The Trump administration's efforts to cut federal employees and cancel contracts have raised concerns about potential economic impacts on government contractors, nonprofits, and universities[8].
For more precise quantitative annual growth forecasts for 2025 and beyond, Kiplinger’s full economic forecast products or a Kiplinger Letter subscription might provide detailed projections not included in the web excerpts[3][4]. A free issue of The Kiplinger Letter can be obtained by clicking the provided link.
[1] Kiplinger.com, 2025 Q2 GDP Growth Outpaces Expectations. [2] Kiplinger.com, Tariffs and Trade Distortions Impacting 2025 Economic Growth. [3] Kiplinger.com, Wage Growth and Labor Market Activity Slowing in 2025. [4] Kiplinger.com, Kiplinger's 2025 Economic Outlook: Full Forecast Products and Subscription. [5] Kiplinger.com, Consumer Sentiment Remains Low in Q2 2025. [6] Kiplinger.com, Price Increases on Motor Vehicles Expected in 2025 as Tariff-Induced Import Reductions Subside. [7] Kiplinger.com, 2026 Economic Outlook: Subdued Growth Ahead. [8] Kiplinger.com, Trump Administration's Cuts and Cancellations Raise Concerns for 2025 and Beyond.
In the realm of personal finance, an individual might decide to allocate a part of their savings into DeFi platforms, seeking higher returns as traditional business growth rates slow down in 2025. To complement this investment, they could also consider purchasing essential goods such as home furnishings or sports equipment, as import tariffs have not significantly affected the prices of these items yet.
