World Bank issues grim economic forecast, citing Trump's trade wars
The World Bank has slashed its forecasts for the US economy in the wake of President Donald Trump's tariffs. The bank cut its forecast for US growth in 2025 from its January prediction of 2.3 percent down to 1.4 percent. Economists said 'a substantial rise in trade barriers' — referring to Trump's aggressive trade policies — were to blame for the downgrade.
The new predictions suggest the US will grow half as fast as it did last year when it hit 2.8 percent. The consequences will hit everyday Americans hard. A sluggish economy typically leads to slower job growth or layoffs, like those already underway at Walmart, General Mills, and Microsoft. Stocks could also fall, hitting regular Americans' 401(K)s and investments. The World Bank, which provides grants and low-rate loans to poor economies, also pared back its expectations for global growth, dropping it 2025 forecast from 2.7 percent to 2.3 percent.
World Bank chief economist Indermit Gill (pictured) said the global economy has now missed its chance for a 'soft landing,' the best possible outcome of lowering inflation without causing a recession. 'The world economy today is once more running into turbulence,' Gill wrote in the Global Economic Prospects report. 'Without a swift course correction, the harm to living standards could be deep,' he warned.
The polices have caused many countries to impose reciprocal tariffs on US goods. The result is higher prices for ordinary Americans as retailers pass on the increased costs to consumers. American consumers are already feeling the bite with the cost of cars rising and major grocery chain's such as Walmart raising their prices.
Last week the Organization for Economic Co-operation and Development also warned that the US and global economies are headed for a downturn because of Trump's trade policies. The Paris-based organization slashed its growth forecast for the year down to 2.9 percent compared to 3.3 percent last year.
The group, which is comprised of 38 wealthy nations, said protectionism is also driving up inflation. The OECD said inflation will tick up in the US this year, likely preventing the Fed from cutting rates until 2026.
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