According to the Zhitong Finance APP, Vanguard Group has become the latest institution to lower its forecast for U.S. economic growth in 2025, citing uncertainties surrounding tariffs, immigration policies, and other key policy decisions. One of the world's largest exchange-traded fund (ETF) providers, Vanguard Group now expects the U.S. economic growth rate to decrease from a previous estimate of 2.1% to 1.7% in 2025. Additionally, the company has raised its inflation expectations.
As U.S. President Donald Trump sparked a trade war, institutions, including the Federal Reserve, have generally expressed frustration over the outlook for U.S. economic growth.
Vanguard Group stated, &#34;According to the Federal Reserve's preferred inflation measure—the personal consumption expenditures price index—the core inflation rate, excluding food and energy prices, is expected to reach around 2.7% this year, higher than our previous forecast of 2.5%.&#34;
Vanguard Group noted, &#34;The labor market report for March was much weaker than we are accustomed to. This report will reflect the recent layoffs announced by the U.S. government, and we expect limited job growth in the private sector, which is sensitive to government spending. The uncertainty surrounding tariffs may have suppressed hiring in the construction and manufacturing sectors.&#34;
Vanguard Group anticipates that the Federal Reserve will lower its short-term interest rate target twice in the second half of this year, bringing the rate down to a range of 3.75%-4% by the end of the year. The current rate is 4.25%-4.5%.
Earlier this month, Goldman Sachs lowered its forecast for U.S. GDP growth in 2025 from 2.4% to 1.7%, citing that increased tariffs will lead to rising consumer prices in the U.S., tightening financial conditions, and slowing business investment, thereby putting pressure on U.S. economic growth

Vanguard Group has lowered its 2025 U.S. economic growth forecast from 2.1% to 1.7%. The company pointed out that uncertainties such as tariffs and immigration policies are affecting the economic outlook, and it has raised its inflation expectation to 2.7%. Vanguard Group expects the Federal Reserve to cut short-term interest rates twice in the second half of the year, with the year-end rate dropping to 3.75%-4%

Uncertainty looms large as Vanguard Group lowers its 2025 U.S. economic growth forecast