U.S. economy poised to lead the global pack in 2025, IMF says. Here's why.

By Jeffry Bartash

Trump White House to have big influence on world economy

The U.S. economy has separated itself from the global pack – and its lead could widen in the new year.

That’s the upshot of a new forecast by the International Monetary Fund, the organization created at the end of World War II to support the global economy.

The global economy is expected to grow below the historic norm in the next two years, the IMF’s new forecast said. The American economy, however, is predicted to expand about 2.7% in 2025, up from the organization’s 2.2% forecast last fall.

Low unemployment, rising incomes, strong consumer spending, higher business investment and the wealth effect of a raging bull market were seen as some of the drivers.

“In the United States, underlying demand remains robust,” the IMF said.

How good is 2.7% growth?

Until recently, the U.S. economy’s ideal growth rate – the fastest it could expand without stoking inflation – was estimated at 1.8%.

Instead, the U.S. grew almost 3% in 2023 and the economy could come close to that mark again in 2024 once all the data is in.

The IMF was not all gushy about the U.S. economy.

The fund said a rapidly rising U.S. debt could undermine the powerful Treasury market and push up global interest rates.

The policies of a business-friendly Trump administration were also seen as a double-edged sword.

On one hand, lower taxes and deregulation could speed up growth, but tariffs and a crackdown on immigration could raise inflation and harm growth if the Fed was forced to take action, the IMF argued.

Inflation in the U.S. is still running above pre-COVID-19 levels, the IMF pointed out, and recent progress appears to have stalled.

The rest of the world is not immune to what’s going on in the U.S., either.

Changes in the world’s largest economy on matters such as tariffs and trade will spill over, the IMF said, making it harder for other countries to navigate the next two years.

Nor can other countries lower interest rates much further or boost government spending without negative repercussions, the IMF said. Lingering inflation and high budget deficits limit the maneuvering room of most major economies.

-Jeffry Bartash

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01-17-25 0952ET

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