U.S. Poised For ‘Solid’ Growth, Major Political Uncertainties In 2025: Economist

The U.S elections pose potential risks for the economy regardless of who the winners are, says Douglas Holtz-Eakin, former director of the Congressional Budget Office.

The good news for the 2025 economic outlook is that the U.S. is on track for strong growth — though this is an “outlook that is fraught with risks,” veteran economist Douglas Holtz-Eakin said Monday.

“For the foreseeable future, the economy is in very solid shape,” Holtz-Eakin, former director of the Congressional Budget Office, told an audience of C-level executives from leading IT solution and service providers in Atlanta.

However, the U.S elections pose potential risks for the economy regardless of who the winners are, he said during a keynote session at the 2024 XChange Best of Breed Conference, hosted by CRN parent The Channel Company.

While “the near term looks quite good,” the “risks to the outlook are real and the policy risks are large,” Holtz-Eakin said.

Just one of many examples, he said, is that “if [Donald Trump] is elected president, there will be more tariffs.”

At the same time, he noted that while Trump has proposed lowering the federal corporate tax rate to 15 percent from the current 21 percent, Vice President Kamala Harris has proposed raising the tax rate to 28 percent. “There's an enormous difference there,” Holtz-Eakin said.

In either case, he said, “there is not, running for president, a genuinely pro-growth candidate with a deep philosophy on how to support the private sector.”

Other uncertainties abound for 2025, including the ongoing wars in the Middle East and Ukraine, the economic woes that China is facing and additional federal risks such as expected battles over the debt limit, Holtz-Eakin said.

Without a doubt, the U.S. economy is facing uncertainties that the political environment is having a major impact upon, said Jack Skinner, CTO of Oversee My IT, an MSP based in Lewisville, Texas.

“I think it's concerning that we don't have a clear path forward from either of the candidates,” Skinner said. “The next 12 to 24 months is going to be very interesting, no matter which way things shake out [with the elections].”

Still, many of the factors driving increased spending among customers in IT and security — such as the surging interest in GenAI — are likely to continue regardless of how the elections go, he said.

“I do see the investment coming. AI is going to drive some investment there,” Skinner said. “But my worry is, the clients are going to have to be fiscally stable in order to continue that — or that's probably the first thing they're going to cut.”

Holtz-Eakin, who is currently the president of the think tank American Action Forum, said another area where he is hoping to see more clarity is in terms of energy strategy — something that’s of crucial importance to the future growth of the AI opportunity.

“Neither is talking seriously about an energy strategy where we have a grid that actually can support the clear electrification needs that we're going to see,” he said.

The demand for powering data centers to support AI growth going forward will need “some sort of support at the federal government,” Holtz-Eakin said. “There needs to be a strategy to make this happen.”