Investing.com — In its annual outlook note released Tuesday, JPMorgan (NYSE:) said it expects a resilient U.S. economy in 2025, supported by a business-friendly policy shift and continued investments focused on AI.
“The United States will remain the engine of global growth with a continued healthy labor market, strong credit fundamentals, ample liquidity in the system and expanding AI-related capital spending,” noted analysts.
The firm forecasts that the will reach 6,500 by the end of 2025, representing an increase of around 9% from current levels. The index's earnings per share are expected to reach $270, representing annual growth of 10%.
JPMorgan highlights broadening earnings across sectors, with all 11 S&P sectors expected to post positive growth next year, compared to mixed performance in 2024.
On the monetary front, the Federal Reserve is expected to cut interest rates by 100 basis points, to 3.75% in September 2025. However, JPMorgan emphasizes that the timing and scope of policy actions, including deregulation and trade measures, introduce significant uncertainties into the outlook.
As for the dollar, JPMorgan remains optimistic and forecasts that the exchange rate will cross parity at 0.99 in the first quarter of 2025, citing American exceptionalism and a favorable political environment.
“Our working hypothesis is that a second Trump administration would bring higher tariffs for China, some further tax cuts and easing of regulations. In this case, the US economy is expected to grow by 2.2%. in 2025, surpassing other economies in the world for the third consecutive year and reinforcing the rise of the dollar,” explains the investment bank.
The company also highlights risks including potential inflationary pressures from trade policies and uncertainty over immigration and regulatory reforms under the new U.S. administration.
Despite these challenges, JPMorgan concludes: “We are positive on U.S. stocks, but expect greater dispersion due to differences in earnings growth and investor positioning.”
