2025 Economic and Market Outlook: Global Summary by Vanguard
In the past two years, global inflation has significantly decreased and is now close to 2%. However, the journey to this point has not been the same for every country. Most developed markets have had to navigate through monetary policy changes to reach this level of disinflation. The United States, on the other hand, stands out due to its strong economic growth and employment rates, which have not been affected by these policy adjustments.
Many have been debating whether the U.S. has achieved a soft landing or if the high interest rates will cause a hard landing in the future. This debate has been ongoing, focusing on whether the U.S. Federal Reserve can effectively time its rate cuts to achieve a smooth disinflation process. However, this narrow focus on the landing phase might not fully capture the unique combination of robust growth and decreasing inflation that the U.S. has experienced.
In our 2025 economic outlook, we look at the supply-side factors that have influenced the U.S. economy. Factors such as increased labor productivity and available workforce play a crucial role in explaining the positive growth and inflation trends. Understanding these supply-side dynamics also helps in identifying potential risks, such as changes in immigration policies, geopolitical tensions, or tariffs, which could impact the economy and markets.
The global economic and market outlook for 2025, as analyzed by Vanguard in their report “Beyond the Landing,” provides a comprehensive view of the current economic landscape and potential future trends. This summary highlights key findings that will be detailed in the full report set to be released in mid-December.
