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10/01/2025
With European growth expectations for 2025 now already subdued, it is hard to imagine further bad news catching prognosticators by surprise.
“To expect the unexpected shows a thoroughly modern intellect,” observes Mrs. Cheveley in Oscar Wilde’s “An Ideal Husband.” At this time of the year, it is certainly worth reminding oneself just how far actual economic performance can occasionally defy consensus expectations of professional prognosticators.
Our Chart of the Week looks at what U.S. and Eurozone growth rates the consensus had penciled in at various points during the past two years, for both 2024 and 2025. You might recall that throughout much half of 2023, most were confidently expecting the U.S. to eventually enter a recession. Instead, actual U.S. performance defied in 2024 the naysayers, with growth expectations for 2025 gaining another boost after the November U.S. presidential elections.
The reverse has been true for the Eurozone, though the averages there hides as much as they reveal. By many measures, including growth, Spain has been one of the developed world’s star performers in 2024.[1]
Sources: Bloomberg Finance L.P., DWS Investment GmbH as of 1/7/25
Several smaller economies of the Old Continent both within (such as Greece, Lithuania and Ireland) and outside the Eurozone (Denmark and Norway) also grew well last year, even by U.S. standards. At least so far, the sense of European economic malaise seemed to be largely a German speaking phenomenon in 2024, with Austria and Germany particularly stricken. The turbulent political situation in both countries, as well as in France, has no doubt dampened sentiment. The good news, if one can call it that, is that it would be increasingly difficult to surprise forecasters negatively. Since consensus expectations for economic growth in the Eurozone are already very subdued, the shock potential of further bad news seems limited - at least on this side of the pond.
For a useful overview, see The Economist (Dec. 10, 2024), “Which economy did best in 2024? We rank countries on five measures”
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