ORLANDO, March 6, 2025 — Economic shakeups are dominating the headlines—tariffs, “stagflation,” federal job cuts. But while the chaos fuels the news cycle, the real impact is still unfolding, says University of Central Florida economist Sean Snaith.
In his latest quarterly U.S. economic forecast released this morning, Snaith says there is a high level of uncertainty with the frenetic pace of the Trump administration’s initial weeks.
“We don’t know how long these tariffs are going to be around and what costs could get passed onto consumers,” said Snaith, the director of UCF’s Institute for Economic Forecasting. “Until all the dust settles, and the markets—really, all of us—can discern what a ‘new normal’ might look like in this administration, uncertainty will persist and that always has a dampening effect on economic growth.”
But Snaith suggests there are reasons to be positive about the country’s economic outlook. After two years of erosion, consumers' purchasing power has been clawing its way back, he said. Upward trends in wage growth are helping households repair inflation-strained budgets.
Ultimately, Snaith concludes: “The end of election uncertainty and business friendlier policies from D.C. should continue the economic expansion through the end of our forecast horizon, if the frenetic change and uncertainty accompanying DOGE don’t knock the economy off its tracks.”
Still, Snaith’s concerns about the rising national debt and real efforts to cut federal spending loom large, especially when he says more substantive change would need to come through legislation.
“DOGE’s efforts may reduce the growth of government spending, but I am less confident it will be a permanent change to the rudderless budget process in D.C.,” he said. “Much like March, DOGE has come in like a lion—but without support from Congress for ongoing austerity, it may very well go out like a lamb.”
Other highlights from Snaith’s latest four-year U.S. forecast include:
—The labor market is cooling. Payroll job growth of 2.2% in 2023 is decelerating steadily, having fallen to 1.3% in 2024, to 1.1% in 2025, and to 0.2% in 2026 before turning slightly negative in 2027 and then slightly positive in 2028.
—Despite resistance to the effects of the Fed’s tightening of policy, the headline unemployment rate (U-3) is expected to gradually rise to 4.7% in 2027 before declining slightly in 2028.
—Core consumer price inflation will continue its slow decline. By the end of 2027, headline inflation will be close to the Fed’s target level of 2%. The Fed prematurely started to cut interest rates. If progress continues to stall, then the Fed may have to pause planned rate cuts in 2025.
—Real consumption spending eased to 2.5% in 2023 due to falling real wages. Spending ticked up to 2.8% in 2024 as real wage began to rise again. It will continue to do so, hitting 3.0% in 2025. Growth will slow to 2.2% in 2026, 2.3% in 2027 and 2.7% in 2028.
—Real GDP growth hit 2.9% in 2023 and 2.8% for 2024. Growth will slow over the next several years to 1.6% in 2027. From there, real GDP growth will pick up, hitting 1.8% in 2028
—High prices combined with 7%-plus mortgage rates eroded housing demand. However, low inventories will support the sector. Housing starts declined from 1.6 million in 2022 to 1.42 million in 2023 and will continue to ease, reaching 1.30 million in 2027. However, as mortgage rates decline, starts will creep up, reaching 1.33 million in 2028.
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Sean Snaith, Ph.D., is the director of UCF’s Institute for Economic Forecasting and a nationally recognized economist in the field of economics, forecasting, analysis and market sizing. He has been recognized by Bloomberg News as one of the country’s most accurate economic forecasters and has served as a consultant for both local governments and multi-national corporations. Before joining UCF’s College of Business, Snaith held faculty positions at Pennsylvania State University, American University in Cairo, the University of North Dakota and the University of the Pacific. More of Snaith’s work is available here or you can follow him @SeanSnaith.