AmiSight 1/26: Despite Trumponomics, Economists Expect Growth This Year

After slashing expectations last spring when President Trump announced unprecedented tariffs, economists have changed course on growth.

When Trump announced import tariffs last April, a group of economists regularly surveyed by The Wall Street Journal slashed their forecasts for economic growth in 2025 from over 2% to 0.8%. The economists now forecast 2.3% gross domestic product growth for 2025 and 2.2% for 2026.

So, what changed their minds? First of all, many tariffs were scaled back and the impact of the remainder proved more muted than expected. Increased investment in artificial intelligence last year also helped drive growth and productivity. Also considered were increased spending by upper-income households buoyed by high stock-market valuations, and tax cuts from the One Big Beautiful Bill Act which should result in higher refunds this spring.

The one part of the economy that fared poorly last year was the job market as the monthly job growth went down in 2025 while the unemployment rate increased. However, economists think the worst has passed for jobs as they expect the unemployment rate to stabilize and monthly job growth to increase due, in part, to the Federal Reserve’s rate cuts late last year.

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