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Quarterly economic outlook: The world just keeps truckin’ on

October 6, 2025
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SEI recently released its third-quarter Economic Outlook. Here is a summary of our key perspectives, focusing on global economic growth, monetary policy, inflation, geopolitics, elections across the globe, and equity markets. 

  • President Trump continues to push policy changes aggressively across many fronts, including tariffs, immigration and personnel changes at the Federal Reserve.
  • The U.S. economy remains resilient despite all the policy uncertainty, although there are recent signs of deterioration in the labor market.
  • Canada’s growth is supported by consumer spending but hurt by U.S. tariffs.
  • Growth in the United Kingdom and Europe remains sluggish.
  • Accelerated productivity growth is the key to a more optimistic inflation outlook, but it will take time for new technologies to have a measurable impact.
  • The Supreme Court will decide on the constitutionality of the reciprocal tariffs imposed by Trump, but even if those duties are negated, there are other tools at the President’s disposal to maintain tariffs at a high level.
  • Tariffs have become a significant revenue source for the U.S. government and if that flow is disrupted, the government’s deficit will widen, and financial markets could become more volatile for a time.
  • The Administration is challenging the Fed’s independence, but it is unlikely the President will succeed in the attempt.
  • Core inflation remains almost a percentage point above the Fed’s target and services inflation is a persistent problem across developed economies.
  • Long-term bond yields are likely to remain elevated, especially in the U.S. and the U.K. reflecting inflation and fiscal-policy concerns.
  • Investors remain surprisingly complacent, with high-yield credit spreads extremely tight.
  • U.S. and international equity markets are in new-high territory.
  • Mega-cap U.S. tech stocks are once again leading equity markets higher, although valuations and index overconcentration are yellow flags.
  • International equities remain cheaper compared to U.S. stocks and offer potential upside for diversified portfolios.
jim_solloway

James Solloway, CFA

Chief Market Strategist and Senior Portfolio Manager

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Important Information

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Positioning and holdings are subject to change. All information as of the date indicated. There are risks involved with investing, including possible loss of principal. This information should not be relied upon by the reader as research or investment advice, (unless you have otherwise separately entered into a written agreement with SEI for the provision of investment advice) nor should it be construed as a recommendation to purchase or sell a security. The reader should consult with their financial professional for more information.