Forecast 2025: roaring or tepid? – Michael Roberts
Inflation has moderated but is not yet tamed. While 6 of the 7 leading capitalist economies were stagnant, the US economy grew about 2.5% in 2024. However, both the US private and public sectors are highly leveraged by debt, posing risks that could dampen growth or trigger a downturn.
“If the cost of borrowing and servicing debt does not come down, there is an increased risk that the so-called ‘zombie’ companies (which do not make enough profits to cover their debt costs and must keep borrowing) will start to go bust. Over 40% of the top 2000 companies in the US are unprofitable, the most since the pandemic. At the same time, interest expense as a % of total debt of these firms hit 7.1%, the highest since 2003.”
US labor productivity is growing much faster than in the Eurozone.
Meanwhile, the US is the most unequal among its peers:
“The United States is the most unequal country in the OECD, with 21% of national income going to the richest 1% – the same as in Mexico (21%) and slightly more than in South Africa (19%). While real incomes for billions of people were stagnant or rose only slightly, incomes and wealth for the superrich rose at a record pace. The US stock market hit new highs and US oligarchs like Elon Musk and Jeff Bezos etc saw their net wealth rocket by billions to new grotesque highs.”