2025 will be a disastrous year for the United States

In December 2024, Goldman Sachs projected that the European economies would confront significant challenges throughout 2025. This outlook was influenced by several factors, including tariffs proposed by the incoming Trump administration, ongoing fiscal tightening across the euro area, and structural issues hindering manufacturing growth. Goldman’s analysis suggested that both the euro area and the United Kingdom would see lower-than-expected growth rates, with projections set at 0.8% for the euro area and 1% for the UK. The bank's report further pointed out that wage growth in the euro area has slowed as it aligned with past price increases, while underlying inflation had significantly decreased since the summer of 2024. The report highlighted the European Central Bank's (ECB) responsiveness to these economic conditions, noting that it had cut policy rates by 100 basis points over the year. Analysts at Goldman anticipated that the ECB may implement further reductions of 25 basis points sequentially to achieve a rate of 1.75% by mid-2025, contingent upon the economic environment worsening. The relatively resilient labor market in the euro area and the persistent inflation issues in the UK contrasted with this generally pessimistic outlook. Goldman Sachs' findings underscored concerns regarding external influences on economic stability, particularly the anticipated impact of tariffs originating from policies introduced by the newly elected Trump administration. Historical analyses indicated that such trade measures generally had limited immediate impacts on inflation, suggesting GDP growth could be curtailed without spiking prices. Overall, these economic forecasts painted a troubling picture for Europe as the year 2025 approached, with business leaders and policymakers urged to prepare for a year characterized by sluggish growth and potential economic strife against a backdrop of shifting political landscapes.