Economy 2025 in the new Trump era
By: Diana Bello Aristizábal
Donald Trump will begin his second term on Jan. 20 and after settling in the White House, all eyes will be on the economy and the new measures he will implement that will determine, in big part, whether or not 2025 will be a year of growth and opportunities for the nation.
The president-elect promised while campaigning to impose new tariffs on imports, make effective selective tax exemptions, help more middle-class residents, especially with regards to housing access, and lower prices, among other measures.
“All the conditions are in place for us to have a wonderful economy in 2025,” says without hesitation Ivan Jimenez, Managing Director at Greenholder Corporation, a company that develops economic analysis.
The conditions are right, first of all, because Donald Trump’s victory over Vice President Kamala Harris in November was overwhelming and the Senate is now mostly represented by the Republican party, which will increase Trump’s power to implement any policy he wishes, while at the same time will replace the uncertainty atmosphere of four years ago by one of confidence and optimism.
“In this case, there is no fertile ground for uncertainty as there was a clear definition of the winner and the markets love that,” says Jimenez, adding that having certainty in results and conditions is one of the requirements for the economy to prosper.
Another advantage point is that almost all battles that were fought in the COVID-19 aftermath to stabilize and boost the economy have already been won. For example, the latest unemployment rate as of December 2024 was 4.1% compared to a rate of 14.8% in April 2020, one of the worst moments of the pandemic.
While this doesn’t mean there are no opportunities for improvement, it does, however, signs that the economy is creating jobs without the peaks of shortages seen four years ago. The same can be said of inflation, which as of November 2024 was placed in a rate of 2.7% in contrast to the June 2022 inflation rate of 9.1% when it broke its record of the last 40 years.
Trending towards sustainability
Given the current conditions that find the new administration, Ivan Jimenez believes that “rampant inflation” is not anticipated for 2025. “The direction it’s going is downwards and we are, perhaps, in one of the best moments of the economy of the last 50 years.”
The path is even clear for the goal set by the FED of reaching a 2% inflation rate to be met between June and September of this year, so long as the price of oil doesn’t skyrocket and the rate of productivity and competition in the United States is maintained.
On the other hand, consumer confidence is expected to be stable if we consider that 2024 closed with an increase in consumption of more than 3 percent compared to 2023 in categories such as jewelry, clothing and items with a price value greater than $500 and not in basic home goods.
Nevertheless, consumers may find it difficult to meet their financial commitments if we factor that even though they took risks in December, the default rate on credit card payments increased considerably compared to 2023.
And what will happen to prices? The answer is unknown, pending how aggressive are the import tariffs the president-elect promised to impose and what specific groups affect. On a positive note, the impact of these will not be apparent in the first 6 to 12 months.
“Prices won’t rise immediately due to inventory. I mean, if you have a full tank and gas prices increase to a dollar, that doesn’t actually hurt you until the tank is empty,” Jimenez explains with a metaphor.
But prices will rise eventually and as of now it’s not clear how that could alter the entire value and logistics chains. “This is the big question that remains unanswered, because there is no certainty on whether tariffs will be a bargaining chip or if they will truly be increased,” he says.
As for housing prices, something that is undoubtedly a major concern for citizens, rent is not expected to rise by 30% as occurred in previous years, although 30-year mortgage interest rates remain relatively high.
“The housing issue has been the most painful one in the economy of the last three years for a group of people. Let us remember that the difference between rent prices and prices of other goods is that when the former increases, it doesn’t tend to go down. My advice is that this year try to buy a home, one that you can afford at this time.”
As for national production, it’s foreseen that in 2025 measures will be implemented to facilitate the export of natural gas and oil, which would increase the nation’s income and help the gross domestic product grow. It’s wise to consider that the reduction in tax rates promised by the government could impact, as it tends to do so, productivity and the amount of money in circulation.
There will be opportunities for the technology manufacturing sector following the approval of the CHIPS Act, that aims to encourage job creation and generate greater returns through funds of which only 5% has been used.
“This means that 95% of the approved funds have yet to be used to promote more manufacturing into the United States, that is, everything that has to do with innovation and new sciences.”
Given the above, one might think that in 2025 we will have an economy with sustainable growth with not projected disruptions in its trajectory, according to the stock market that analyzes the results of the largest companies in the United States. “I am of that school of thought,” concludes the CEO of Greenholder Corporation.