In the past six months, a chorus of analysts and commentators warned of an impending collapse of the U.S. economy. Many predicted that persistent inflation, high interest rates, and ballooning government deficits would drag growth to a halt and trigger a recession. However, the data tell a different story: the United States demonstrates economic strength, fiscal control, and improving inflation expectations.
Rising Growth Estimates Defy the Pessimists
At the start of 2025, forecasts painted a gloomy picture. The first quarter saw a contraction in GDP, with the economy shrinking by 0.5 percent. However, this decline resulted from lower government spending and higher imports, while the private sector continued to strengthen. Soon afterward, the narrative shifted. By mid-year, leading economic models and analysts began revising their growth estimates upward. Trading Economics, for example, projected a robust 3.5 percent GDP growth rate for the second quarter, a sharp reversal from earlier pessimism. The Atlanta Fed’s GDPNow model reflected a similar positive change, estimating 2.6 percent growth for Q2 as of July 9. Additionally, consensus estimates rose to 2.1 percent for the second quarter, up from 1.3 percent previously, while inflation estimates declined.
