US Economic Outlook: May 2025

The outlook for 2025 has shifted dramatically. In this month’s 10-minute report, Board Principal Economist Natalie Gallagher explains how policy changes are reshaping the macro landscape—and why businesses need to rethink their assumptions.

Highlights in this month’s report include:   

• Growth projections have been downgraded, as new tariffs raise input costs, tightening margins and leading to more cautious consumer and business behavior.
• Core inflation is now expected to reaccelerate, reversing earlier disinflation trends and putting additional pressure on household budgets.
• Consumer sentiment has dropped 30% since December, driven by rising inflation, job insecurity, and increased economic uncertainty.