Key Point: “The U.S. economy is ending 2024 in arguably its most stable condition since the start of the coronavirus pandemic. […] Yet the economic outlook for 2025 is as murky as ever, for one major reason: President-elect Donald J. Trump. […] He has proposed imposing steep new tariffs and deporting potentially millions of undocumented immigrants, which could lead to higher prices, slower growth or both, according to most economic models.”

New York Times: The Economy Is Finally Stable. Is That About to Change?

By: Ben Casselman

• The U.S. economy is ending 2024 in arguably its most stable condition since the start of the coronavirus pandemic. Inflation has cooled. Unemployment is low. The Federal Reserve is cutting interest rates. The recession that many forecasters once warned was inevitable hasn’t materialized.
• Yet the economic outlook for 2025 is as murky as ever, for one major reason: President-elect Donald J. Trump. On the campaign trail and in the weeks since his election, Mr. Trump has proposed sweeping policy changes that could have profound — and complicated — implications for the economy.
• He has proposed imposing steep new tariffs and deporting potentially millions of undocumented immigrants, which could lead to higher prices, slower growth or both, according to most economic models. 
• “It is a very uncertain outlook, and most of that uncertainty comes from potential changes in policy,” said Michael Gapen, chief U.S. economist for Morgan Stanley.
• Last month, [Trump] announced on social media that he would put 25 percent tariffs on imports from Canada and Mexico unless they stopped drugs and migrants from entering the United States.
• “Markets have a serenity about trade and immigration policy that I think is unwarranted,” said Michael Strain, an economist at the American Enterprise Institute, a conservative think tank. “Trade and immigration policy could be extremely disruptive to the economy.”
• Mr. Strain outlined a worst-case outlook for the economy, in which steep new tariffs discourage investment, mass deportations limit employers’ ability to find workers and mounting deficits drive up borrowing costs. If that happens, Americans could face both rising prices and slowing growth — a form of the “stagflation” that the U.S. economy last experienced nearly a half century ago.