Economists forecast slowing US growth and increased inflation

Good morning and welcome to White House Watch!

Donald Trump and Vladimir Putin are due to speak on the phone today about a ceasefire in the Russia-Ukraine war, with “land” and “power plants” on the list of concessions the US president wants from his Russian counterpart.

In the meantime, let’s talk about:

• US economic growth slowdown

• Trump threat to Iran over Houthi attacks

• The man behind Meta’s rightward pivot

The US economy is losing its aura of invincibility.

Tarnishing its lustre are Trump’s sweeping tariffs and his administration’s assault on government institutions, which leading economists have warned will slow US economic growth and accelerate inflation.

Uncertainty around Trump’s economic policy will dent growth, according to almost all 49 economists polled by the FT and Chicago Booth. The polled economists expect the economy to expand 1.6 per cent in 2025, down sharply from 2.3 per cent in the December survey.

The warning signs are becoming clear: consumers and businesses are pulling back on spending, and sentiment is sliding.

Meanwhile, the OECD has warned that Trump’s trade war is taking a “significant” toll on the global economy, with growth projected to slow in both 2025 and 2026. Growth forecasts were slashed for a dozen G20 nations.

As Robert Barbera, an economist at Johns Hopkins University, told the FT:

Tariffs, tax cuts, government employment and expenditure cuts, assaults on education funding, and [Federal Reserve] independence all are in play. 

Nothing of the sort has been in play in my 50 years of forecasting.

Weighing on the uncertainty is the fact that we don’t know which policies — including the cost-cutting craze from Elon Musk’s so-called Department of Government Efficiency (Doge) — will survive court challenges.

The FT-Booth poll also found that economists anticipate that Trump’s policies will push inflation up. They forecast that the annual rate of the core personal consumption expenditures price index — a crucial metric for the Fed — will rise to 2.8 per cent by the end of 2025, up from a December prediction of 2.5 per cent.

The Fed is all but sure to hold rates steady when policymakers meet tomorrow, but the bank’s overall message will be under scrutiny.

The vast majority of polled economists are also worried about the reliability of the country’s economic data, which is vital for both the Fed and investors to have an accurate picture of the US economy.

The latest headlines

What we’re hearing

Let me introduce you to Joel Kaplan, the mastermind behind Meta’s pivot to Trump and CEO Mark Zuckerberg’s most trusted political fixer.

He is a Republican lobbyist, newly promoted to the role of head of global affairs at the $1.7tn social media giant. Meta’s unexpected shift right — and its loosening of moderation policies — was the result of months of Kaplan’s careful planning. 

“He has Mark’s ear in a way that nobody does,” one person who has worked closely with Kaplan told the FT’s Hannah Murphy.

Multiple former staffers claim that over the past 10 years, Kaplan has interfered in policy decisions, including about content staying online. They told Hannah that in some cases he’s overridden the company’s typical policy rationale or other senior decision makers so that right-wing figures wouldn’t complain about being censored.

To some insiders, Kaplan is the powerbroker Zuckerberg needs to navigate the Trump administration and not become a target of the president’s retribution. But to critics, Kaplan’s focus on optics has come at the expense of online safety and alienating employees.

His reputation has also taken a hit.

Kaplan was in the news this week after an explosive new memoir by former Meta executive Sarah Wynn-Williams accused him of sexual harassment, including inappropriate comments (Wynn-Williams is married to an FT editor).

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