Economy faces ‘some potential storms’ in 2025: economist Mark Zandi

The economy is doing “exceptionally well” as President-elect Donald Trump gets ready to enter the White House, according to Moody’s Analytics chief economist Mark Zandi.

Zandi, speaking at the Consumer Federation of America’s financial services conference on Wednesday, noted some of the glowing areas: Gross domestic product has been growing at around 3%, productivity and business formation rates are strong and the stock market is up.

“The economy can weather a lot of storms,” Zandi said.

But, he added, “I do think there are some potential storms coming” next year under the new administration.

Zandi expects Trump to act quickly on deporting immigrants and implementing tariffs, two moves that could have profound impacts on the U.S. economy.

“I believe President Trump is going to do what he said he’ll do on the campaign trail,” Zandi said. “He’s going to be quite aggressive in pursuing the policies.”

Immigration has played a big role in the economy’s strength, Zandi said.

Others agree. “Recent immigrants have flowed disproportionately into the parts of the labor force that were particularly tight in 2022, contributing to labor supply in places where it was most badly needed,” Goldman Sachs analysts wrote in a note to clients in May.

Meanwhile, tariffs create “a whole lot of uncertainty for businesses,” Zandi said. As a result, they could lead to job losses.

Tariffs are also likely to impact people’s spending, he said.

“It’s going to mean higher costs for consumers, it’s a tax increase,” Zandi said.

Trump’s universal tariff proposals could cause prices to skyrocket on clothing, toys, furniture, household appliances, footwear and travel goods, according to a recent report from the National Retail Federation.

Trump has said he would impose a 10% or 20% tariff on all imports across the board.

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The NRF found that the impact of the tariffs would be “dramatic” double-digit percentage price spikes in nearly all six retail categories that the trade group examined.

For example, the cost of clothing could rise between 12.5% and 20.6%, the analysis found. That means an $80 pair of men’s jeans would instead cost between $90 and $96.

These new prices would squeeze consumer budgets, especially for low-income households that spend triple as much of their monthly budgets on apparel as high-income households spend, according to the Bureau of Labor Statistics.