BlackRock's 2025 Global Outlook, published on Wednesday, predicts that US inflationary pressures will remain elevated due to factors like rising geopolitical fragmentation, significant investments in AI infrastructure, and the low-carbon transition.
"We also think an aging workforce could start to bite as immigration slows, likely keeping wage growth too high for inflation to fall back to the Fed's 2% target," the document stated while adding that the Fed cuts will be limited, with rates unlikely to drop below 4%. Persistent budget deficits and sticky inflation could push long-term Treasury yields higher as investors demand greater compensation for risk.
Regarding artificial intelligence, Blackrock estimates that this industry could reach $700 billion by 2030, or around 2% of the US GDP. "Investment on this scale creates a vital role for capital markets – and an opportunity for investors, in our view. Yet such growth brings challenges, such as strain on energy grids," the report added.
