Reasons to be Optimistic
ECONOMIC LADDERS
Economic upside
Three factors could provide an unexpected boost to economic growth: corporate capital expenditures, an increase in productivity, and a potential rise in federal spending.
1.8%
Our expected U.S. economic growth rate in 2025
15%
Corporate capital spending's share of U.S. economic output in 2024{{wt-d91*}}
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How can the 2025 Capital Markets Forecast help you? Our team would be happy to discuss the report’s potential implications for your portfolio.
Even as we expect economic growth to slow, we see reasons for optimism.
We expect economic growth to decelerate in 2025 to 1.8%, down from an estimated 2.7% in 2024. But it’s quite possible that growth could surprise to the upside. Here are three factors that could be economic ladders:
- Corporate capital expenditures’ growth rate is now the slowest in the post-Covid era and on par with prepandemic growth rates. Certain features of the presumed Trump tax policy, though, could stimulate capital expenditures to rise higher and faster.
- We believe that productivity is poised to enter a period of robust long-term growth, which could have a positive economic impact.
- Reducing federal spending is high on the to-do list of the Trump administration and congressional Republicans. Yet, our analysis concludes that there is ample opportunity for increased spending in 2025.
Productivity Is Ready to Break Out
Rising productivity is the silver bullet that can propel economic growth for everyone. This includes both real wages for workers and profit margins for businesses. We believe it’s poised to break out and continue for many years to come.
Capex Is Incentivized to Grow
Key provisions of the Tax Cuts and Jobs Act have boosted corporate capital expenditures, but they’re scheduled to expire at the end of 2025. We expect the Trump administration to extend these provisions, which would incentivize companies to raise their capex levels.
Luke Tilley
Chief Economist
Meet Luke Tilley, Chief Economist
Luke heads Economics, Asset Allocation & Quantitative Services for Wilmington Trust. He analyzes and interprets economic data and trends to provide strategic direction for Wilmington Trust’s economic-led investment strategy. Previously, he was an officer and economic advisor for the Federal Reserve Bank of Philadelphia.
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Wilmington Trust has been the wealth manager of choice for many Americans since 1903.{{wt-d48*}} Whether you’re thinking about investing now or for the future, we’d be happy to discuss how we can help.
