Patrick Artus: 'In the US, attacks on the public research system and universities compromise growth prospects'
The United States, inevitably, is heading for very weak economic growth in 2025. The economic policies being pursued – higher tariffs and restrictions on immigration – have already had visible effects on inflation expectations. These expectations have jumped to as high as 7% over one year, according to a survey of American households by The Conference Board, and up to 6.5%, according to another survey by the University of Michigan. The prospect of high inflation is very unfavorable for US household consumption, since in the US, wages are only very partially indexed to prices.
Therefore, under these circumstances, it is not surprising that US consumer confidence about the economic situation in six months has collapsed, according to The Conference Board survey, with the confidence index dropping to 73, compared to 85 at the end of 2024. Furthermore, inflation expectations are being reinforced by the fight against illegal immigration (even though, under Joe Biden's presidency, net migration reached 1.5 million people per year).
This has led to a slowdown in household consumption: Its annual growth fell from 4% in the fourth quarter of 2024 to 1.8% in the first quarter of 2025. Over the same periods, the growth in goods production dropped from 6.2% to 0.5%.
Backtracking
It is likely that these growth-damaging policies will be loosened. Tariffs on US imports of electronics and automotive parts have already been removed. Donald Trump has reduced tariffs on US imports from China from 145% to 30%. The decline in the US president's popularity in polls, as well as his inability to implement economic policies favorable to the US economy, should lead to more backtracking.
In the US, immigrants are, on average, more highly educated than native-born Americans. Proportionally, they create nearly twice as many businesses. Foreign-born residents make up 14.3% of the population, but 23.6% of entrepreneurs and 23.6% of employees in technology, engineering, and science. As with tariffs, Trump's anti-immigration policy does not appear sustainable.
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