An economic forecast is a prediction of future activity in the economy. Banks, companies, governments and independent associations make economic forecasts in order to better inform themselves about the direction of the economy. The financial markets that these forecasts influence are sensitive to them, and will move as new economic data is released or reported on.
The most difficult economic forecasts involve the analysis of specific industries or firms, especially those that produce durable goods such as automobiles and industrial equipment. In these cases, forecasters are attempting to predict the sales of such goods over long periods of time. Because these sales tend to correlate fairly directly with a variety of other economic variables, such as consumer spending and total product demand, a great deal of work has been put into developing a wide array of forecasting techniques.
Economic growth in the US is expected to slow this year, as business investment falls and imports decline. The artificial boost in early 2025 from businesses and consumers front-loading purchases ahead of anticipated tariffs is expected to fade, setting the stage for a pronounced demand cliff in the second half.
The outlook for global economic growth is bleak, with international discord upending the policy certainties that grew economies and shrunk extreme poverty after World War II. A broad range of downside risks are weighing on growth, from rising trade barriers and elevated policy uncertainty to tighter global financial conditions, volatility in the financial sector, surges in violence and social unrest, further declines in official aid, and severe natural disasters.
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