A Look Ahead to 2025 Economic Predictions

Election Day is in the rearview mirror.

Wells Fargo chief economist Jay Bryson and senior economist Michael Pugliese note that Donald Trump has been elected president of the United States, Republicans picked up a majority of seats in the Senate, and the GOP now controls the House of Representatives.

As the dust continues to settle, the economists in a special Nov. 6 commentary offered preliminary thoughts on the election results and their implications for the U.S. economy:

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• Tax & Spend Policy: An extension of the expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA) is already baked into our existing economic forecast. As a result, a full extension enacted sometime next year, should that occur, would not have an impact on our forecasts for economic growth, inflation, the federal budget deficit, etc.
• Some additional tax cuts seem probable in our view, although the timing, size, and specifics are highly uncertain. New tax cuts of a similar size to the original TCJA probably would lead us to upwardly revise our forecasts for real GDP growth and inflation by a couple of tenths of a percentage point in 2026 and 2027, all else equal.
• Trade Policy: President-elect Trump has proposed a 10 percent across-the-board tariff on America's trading partners with abr 60 percent tariff levied on China. If implemented shortly after Inauguration Day on Jan. 20, these tariffs would impart a modest stagflationary shock to the U.S. economy in 2025. Our model simulations show that the core CPI inflation rate next year would shoot up from its baseline value of 2.7 percent to 4.0 percent. Under this scenario, U.S. real GDP would rise by a sluggish 0.6 percent in 2025.
• Of course, President-elect Trump may decide not to impose tariffs that are so high, and he may not do it so quickly upon taking office. Furthermore, we view these estimates as closer to an upper-bound than a midpoint of the range of possible outcomes. That said, we are inclined to push up our core CPI inflation forecast for 2025, currently 2.7 percent, given the balance of risks.
• Tariffs would offset the boost to economic growth from tax cuts but would further add to the inflationary impulse from tax cuts. Thus, although we may reduce our economic growth forecasts for the next couple of years due to higher tariffs, tax cuts could serve as a mitigating factor. Finally, tariffs increase federal revenues, suggesting they might help limit deficit widening from extending and expanding the TCJA.
• Federal Reserve: Our current forecast looks for the FOMC to cut its target range for the federal funds rate to 3.00-3.25 percent by the end of next year. However, the FOMC may not want to ease policy by that much if new tax cuts and tariffs cause inflation to shoot higher over the next couple of years. Thus, we think the risks to our fed funds rate forecast are skewed to the upside (i.e., less easing next year than we currently project).
• The FOMC's reaction function likely would be more hawkish in response to higher inflation from tax cuts than from tariffs. Tighter monetary policy is an effective method for slowing demand growth, but it cannot do much to combat inflationary pressure from a supply shock such as tariffs.

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Performance Diverges Across Markets As Building Boom Slows

South Carolina's overall industrial performance was mixed across the state as solid absorption along the I-85 and I-77 corridors was offset by large-scale move-outs in the Charleston and Pee Dee regions, according to a 24Q3 report by Colliers, the largest full-service commercial real estate firm in South Carolina with 62 licensed real estate professionals covering the state with locations in Charleston, Columbia, Greenville, and Spartanburg.

Colliers said the state saw vacancy rise to a recent high of 10.77 percent as legacy manufacturing closures and turnover within the 3PL sector, mirroring national trends, drove negative net absorption.

In its report, Colliers said the Greenville-Spartanburg and Columbia markets performed well as the Port of Charleston saw container moves outpace 2023's record volume.

Colliers also said:

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• Average asking rents continued to rise across the state's major metros.
• Construction activity is beginning to tip away from the speculative boom of the past three years toward build-to-suit projects as 76 percent of in-progress speculative space will finish by mid-2025.
• Vacancy increased to 10.77 percent as total inventory increased by 3,630,223 square feet to 516,137,223 square feet.
• Asking lease rates rose slightly to $6.01 per square foot, skewed by high Charleston availability.

The construction pipeline decreased to 10,832,231 square feet, of which roughly 65 percent is speculative.

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Military Times has ranked the University of South Carolina as the nation’s No. 7 “Best for Vets Colleges 2024,” making USC the top-ranked school in the Southeast.

Why it matters, according to USC

The ranking, which covers 304 public and private institutions, serves as the gold standard for higher education institutions among the veteran and military community.

Ranking as the top university in the Southeast and top 10 nationally serves as validation of USC’s efforts to provide a welcoming, supportive environment for veteran and military-affiliated students.

Background

This is the fourth year in a row that USC has been recognized as a Best for Vets institution. Prior to 2021, the university did not have a designated centralized location for veterans to gather, study, and reap the benefits of the services available to them.

In January 2021, the university opened the Veterans and Military Center of Excellence in the heart of campus across from the Horseshoe, providing a sense of community for this population.

What they’re saying

“The unwavering support from the University of South Carolina leadership has empowered us to expand our services for military-affiliated students, allowing us to stay competitive in this dynamic space,” said Candace Terry, executive director for Veterans and Military Affairs. “We look forward to building on this momentum in the coming year, strengthening our commitment to those who have served.”

What sets USC apart

The Veterans and Military Center of Excellence has fundamentally transformed how the university engages with and supports this population, by providing services and programs from the moment students walk onto campus, to the point where they are preparing to graduate and pursue their next career.

Some key attributes that set the university apart from other institutions are its active Student Veterans Association and its career readiness and employer partnerships.

Earning accolades

The university has won a variety of awards for supporting the military-affiliated student population, including best Student Veterans of America chapter in the nation, the William Pearson Tolley Champion for Veterans in Higher Education Award, and was the first university to receive the South Carolina Department of Veterans Affairs Gold Award, a program for military academic recognition for universities and colleagues throughout the state.

A growing population

The Columbia campus serves approximately 2,300 military-affiliated students including veterans, active-duty service members, ROTC, National Guard members, reservists and family members.

Over the course of five years, USC has seen enrollment among the military-affiliated population grow by 46 percent.

The Department of Veterans and Military Affairs, established in 2018, is tasked with implementing a university-wide strategy centered on serving those who serve.

As a population that excels academically, increases diversity and minority representation, and graduates with little to no debt, the veteran and military population has been a driving force behind the overall success and growth of military initiatives on campus.