QNB Predicts Stronger Growth for US Economy in 2025

The Qatar National Bank (QNB) forecasts that the US economy is set to grow by more than the prevailing consensus, estimating an increase of over 2% in 2025. This optimistic outlook stems from robust consumer spending and a surge in private investment.

In its latest Economic Commentary, QNB indicated that early 2023 predictions suggested a gentle slowdown in economic growth. However, a wave of transformative policy initiatives introduced by the new administration has altered this trajectory. A shift in market sentiment has occurred, with positive economic indicators stabilizing and some suggesting an uptick in activity.

Economic Indicators Show Promising Trends

The Federal Reserve Bank of Atlanta’s GDP Now, a real-time estimate of the US economy’s growth, currently projects an annualized growth rate of 3.8% for the third quarter of 2025. This marks a significant recovery from a 0.6% contraction recorded in the first quarter of the same year.

QNB posits that the current consensus growth forecast of 1.7% for this year is overly cautious, given the latest data. The bank aims to highlight essential GDP components contributing to this economic acceleration.

Consumer Spending and Business Investment Drive Growth

Household consumption plays a crucial role in this growth, accounting for nearly 70% of GDP. Recent data indicates that inflation-adjusted retail sales have risen by 1.7% year-over-year, a stark contrast to the -0.3% average from the previous year. This increase is supported by resilient employment figures, albeit slightly declining, and an unemployment rate of 4.3%, which remains within a healthy range.

Moreover, the rise in household net wealth, particularly from stock market gains, has positively influenced spending. Equity holdings represent 35% of household net wealth, and with major indices experiencing a year-to-date growth of 14%, consumer confidence has been bolstered. Total household credit also rose by USD 352 billion in the first half of the year, further sustaining expenditure levels.

On the investment front, businesses are showing strong performance driven by favorable financial conditions and fiscal incentives. Recent reports indicate that growth in core capital goods orders—a key indicator of private-sector capital expenditures—has reached nearly 4% annually, a substantial improvement compared to the 0.9% contraction noted last year.

Several factors contribute to this investment growth. The demand for technology and equipment is surging as companies invest in productivity and artificial intelligence. Government initiatives such as the CHIPS Act and the Inflation Reduction Act are facilitating the construction of semiconductor facilities and clean energy projects, fostering an environment conducive to long-term investments.

In conclusion, the US economy is on a path towards reacceleration, bolstered by strong household consumption and robust private investment. QNB’s forecast of more than 2% growth this year reflects a shift in economic dynamics, positioning the US for a promising future.