The Economic Outlook for Q1 2025

The U.S. economy had a strong run in 2024, with real annualized GDP growth at 3.1% for the third quarter and fourth-quarter estimates between 2%-2.5%.1 However, rising long-term interest rates, with the 10-year Treasury climbing from 3.8% to 4.6% in the fourth quarter, pose a potential risk to GDP growth in 2025. This unusual increase comes as the Federal Reserve has been lowering short-term rates, reflecting market concerns about U.S. fiscal stability or resurgent inflation. If you’d like a more detailed analysis, our Quarterly Outlook draws parallels between the current environment and the inflationary period of the 1970s and early 1980s.

For a deeper dive into these topics, read the full outlook report.

1Bureau of Economic Analysis.

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