Economy faces ‘some potential storms’ in 2025: economist Mark Zandi

According to Mark Zandi, chief economist at Moody’s Analytics, the economy is doing “extraordinarily well” as President-elect Donald Trump prepares to enter the White House.

Speaking at the Consumer Federation of America’s financial services conference on Wednesday, Zandi pointed to some of the bright areas: Gross domestic product has grown about 3%, productivity and business formation rates are strong and the stock market is on the rise.

“The economy can weather many storms,” Zandi said.

But he added: “I think there will be some potential storms next year under the new administration.”

Zandi expects Trump to act quickly on deporting immigrants and imposing tariffs, two moves that could have a profound impact on the U.S. economy.

“I believe that President Trump will do what he promised in the campaign,” Zandi said. “He’s going to be pretty aggressive in pursuing the policies.”

Immigration has played a big role in the economy’s strength, Zandi said.

Others agree. “New immigrants flowed disproportionately into parts of the workforce that were particularly scarce in 2022, adding to labor supply where it was needed most,” Goldman Sachs analysts wrote in a note to clients in May.

Meanwhile, the tariffs are “creating a lot of uncertainty for businesses,” Zandi said. As a result, they could lead to job losses.

Tariffs are also likely to impact people’s spending, he said.

“It will mean higher costs for consumers — it’s a tax increase,” Zandi said.

Trump’s proposals for universal tariffs could cause prices of clothing, toys, furniture, appliances, shoes and travel items to skyrocket, according to a recent report from the National Retail Federation.

Trump has said he would impose a 10% or 20% tariff on all imports across the board.

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The NRF found that the impact of the tariffs would result in “dramatic” double-digit price spikes in nearly all six retail categories studied by the trade group.

For example, the cost of clothing could rise between 12.5% ​​and 20.6%, the analysis found. That means an $80 pair of men’s jeans would cost between $90 and $96 instead.

These new prices would strain consumer budgets, particularly for low-income households, which spend three times as much of their after-tax income on clothing as high-income households, according to the NRF report, which was based on data from the Bureau of Labor Statistics.