Global Macro Outlook: Fourth Quarter 2025

What You Need to Know

The third quarter brought improved clarity around economic policy, with the US tariff regime appearing largely set.  The environment remains somewhat uncertain, however, and we’re increasingly concerned about long-term strains on the system.  Meantime, markets seem focused on the short term, which may seem reasonable, but investors should also be prepared to act quickly if a crisis arises without warning.

• The environment remains somewhat uncertain—but the tail risks around our central scenario for the next few quarters have diminished.
• On top of obvious fiscal vulnerabilities throughout the developed world, the threat to US Fed independence has massive long-term economic and market implications.
• We expect businesses to slog through a few quarters of sluggish demand without having to substantially cut jobs while consumers withstand higher prices, provided they remain employed.
• Goods prices in the US have risen markedly since tariffs began and we expect more to come as businesses pass through rising costs to consumers.
• We see good reasons to expect growth to pick up in a few quarters, albeit to a lower average rate than we’re used to primarily due to diminished global trade.