UBS(US:UBS)2025-09-16 02:03Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the US Economic Outlook for the years 2025-2027, focusing on the implications of tariffs, fiscal policy, and labor market dynamics [1][4][5]. Core Economic Indicators - Real GDP Growth: - 2022: 1.3% - 2023: 3.2% - 2024: 2.5% - 2025: 1.1% - 2026: 1.6% - 2027: 1.7% [4][5] - Unemployment Rate: - 2022: 3.6% - 2023: 3.8% - 2024: 4.2% - 2025: 4.6% - 2026: 4.8% - 2027: 4.7% [4][5] - PCE Inflation: - 2022: 6.0% - 2023: 2.8% - 2024: 2.5% - 2025: 3.1% - 2026: 3.0% - 2027: 2.4% [4][5] - Federal Funds Rate: - 2022: 4.5% - 2023: 5.4% - 2024: 4.4% - 2025: 3.4% - 2026: 3.1% - 2027: 2.9% [4][5] Tariff Implications - The US goods imports totaled $3.2 trillion in 2024, with tariffs increasing the effective tax rate on imports by more than seven times, leading to an increase in the weighted average tariff of approximately 14 percentage points [6][8]. - The tariffs are expected to significantly impact final goods prices, reducing real income and increasing business costs [6][8]. - The tariff actions are anticipated to cause a substantial reordering of the US trading relationships, posing a headwind to growth into 2026 [5][8]. Labor Market Dynamics - The labor market is showing signs of slowing, with nonfarm payroll employment gains averaging 122,000 jobs per month over the past year, indicating a potential contraction if GDP growth falls below 1.0% [70]. - The unemployment rate is projected to rise, with expectations of a tepid labor market due to the impact of tariffs and a slowing economy [70][24]. Fiscal Policy and Government Employment - Fiscal policy is expected to be less supportive in 2024 and 2025 compared to 2023, with a significant reduction in government employment growth anticipated [101][105]. - Federal hiring has already slowed, with expectations of further declines in federal employment [105][108]. Consumption and Economic Growth - Real personal consumption expenditures are projected to slow, with households expected to reduce consumption of imported goods due to rising prices from tariffs [29][31]. - The overall economic growth is anticipated to be sluggish, with the business sector facing challenges from increased costs due to tariffs and uncertainty in tax and trade policies [51][54]. Conclusion - The US economic outlook for 2025-2027 indicates a slowing growth trajectory, influenced by higher tariffs, restrictive monetary policy, and a cooling labor market. The interplay of these factors will be critical in shaping the economic landscape in the coming years [5][70][101].