EY – Macroeconomic Outlook and Impact, Aug 2025

The main topic of the document is the macroeconomic outlook and its impact on businesses.

Key findings include: The global economy shows resilience to tariff and uncertain shocks, but a slowdown in growth is expected. In the US, moderate economic growth is expected amid easing labor market conditions and accelerating inflation. Employment growth is slowing due to increased policy uncertainty, rising costs, and declining immigration flows. Productivity is likely to be constrained by the tariff shock and ongoing political uncertainty. Consumer spending remains but is likely to slow due to weakening labor market dynamics and higher inflation. Housing demand is constrained by low affordability, and construction by high costs and uncertainty; housing prices tend to decline. Business investment is under pressure from rising costs and increased uncertainty, but AI-related investments are a bright spot. The inflationary effects of tariffs unfold gradually and unevenly; core inflation is expected to rise to 3.2% by the end of the year. The Federal Reserve expects the impact of tariffs and is likely to cut rates in September and December. Financial conditions remain resilient despite policy uncertainty, and stock markets have reached new heights due to strong economic fundamentals. Key risks are associated with tariffs and geopolitical tensions; easing trade conflicts and increasing productivity could improve the situation.