How is the US Economy Really Doing? What You Need To Know For 2025

We get it, things feel uncertain right now. Here’s what President-elect Donald Trump’s policies could mean for your wallet in the New Year.

Welcome to 2025! It’s a New Year and it’s also a Presidental transition year which means we’re all wondering where things may be headed this year economy-wise. A little trepidation is always expected, but The Wall Street Journal reports that Americans are feeling especially bleak about how the US economy is doing right now, feeling measurably worse than we did last year about jobs, inflation, income, business, and more. 

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Yet at the same time, the stock market reached record highs in 2024, the S&P 500 climbed nearly 28%, and the unemployment rate is still low at 4.2%. In other words, we have a disconnect — and we have questions. Thankfully, Kathryn Edwards has answers. 

Edwards, a PhD Economist, independent economic policy consultant, and Bloomberg columnist, sat down with HerMoney CEO Jean Chatzky to discuss how the US economy is really doing, and what it could mean for our personal economies. Here’s some of our favorite parts of the conversation. 

The Pandemic’s Lingering Impact On How The US Economy Is Doing

JEAN CHATZKY: Where are we right now and what should we be prepared for going into 2025?

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KATHRYN EDWARDS: We are coming out of an absolute fever dream and you can’t move on to normal times so quickly. In a single month in 2020, the U. S. economy shed 22.5 million jobs. The unemployment rate was posted at 14% but was actually closer to 20%. It’s like, we’re on a massive ship that is 20 trillion dollars in size. You don’t like abrupt movements, you want a steady pace, and you want a charted course. If you go through a massive storm and you’re struck by lightning three times, you emerge okay, but you aren’t the same as if you weren’t struck before.

JEAN CHATZKY: Does that explain why people are feeling so bad or is the bleakness caused by inflation and the fact that our salaries have not really kept up with inflation?

KATHRYN EDWARDS: The economic problems that the Trump campaign successfully tapped into have 40 years of antecedents. The U.S. economy has been unfair and not beneficial for the bottom half of Americans for decades. Slowly and surely, the American economy is taking hallmark goods that people want to afford, like housing, college, and healthcare, and they’re pulling away from more and more Americans. It’s getting to the point where the bottom 60 to 70 percent of Americans feel like they can’t afford their life. That’s not one president, one year, or one election.

The US Stock Market: Will It Continue To Soar?

JEAN CHATZKY: Stocks have soared since the election. Crypto has soared since the election. So where do you think the stock market is headed?

KATHRYN EDWARDS: You should never find your financial life dependent on what happens in the stock market over the next six months. The general philosophy is the sooner I need my money, the more liquid it should be, and the farther away the money needs to be, the more acceptable the risk is. I have money in the stock market, but I think of it as being a 20-year investment in the future or a 10-year investment in the future and not right now.

How Will Tariffs Affect How The US Economy Is Doing?

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JEAN CHATZKY: We can’t open a newspaper or a website news website these days without seeing the word tariffs. So are they coming? What are they coming on? What do they mean for us?

KATHRYN EDWARDS: We don’t know but tariffs are widely regarded as bad policy for two reasons. One, they’re economically destructive because they increase prices. The second reason why they’re widely disregarded is that the consequences are very hard to control. If you put an import tax on something, it makes that something more expensive and the consequences of making that something more expensive are so myriad and unpredictable that it’s one of the reasons why economists hate it.

Bottom Line: How Can We Protect Our Personal Economies In An Unpredictable Landscape?

JEAN CHATZKY: How would you suggest that we manage our money, that we manage our lives going into 2025 to shore up our own economies?

KATHRYN EDWARDS: The best principles are the ones that you don’t need to abandon when circumstances change. Stay true to that and keep your north financial security star your north. I cannot stress enough that the best is yet to come and the best economic era is the one that we are going to build. There is no solution from the past. It has to come from the future and we have to build that future together. We can’t do that if people think that we should be marching backward. So look forward, be optimistic, and believe that the economy can be better. And then you will demand it from your elected officials. 

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