Editor’s note: This article was written by Cori Burcham.
Federal Reserve Bank of Philadelphia President and CEO Patrick Harker often compares economic forecasting to football.
Despite the fact that the U.S. Consumer Price Index (CPI) from January 2025 rose by 0.5%, Harker advised exercising caution before being moved to act based on short-term data from a single report, referring to the Philadelphia Eagles’s 2024 season as a comparison.
“I’d say that it ended rather successfully, even if it gave us diehard fans some moments of real stress and anxiety,” joked Harker, referring to the team’s rough start and eventual Super Bowl win. “So that said, I am taking a similar posture when it comes to monetary policy. In other words, let’s stick to the game plan.”
Harker joined fellow panelists Michael Farr, chief market strategist at Hightower Advisors LLC, and Cristian deRitis, deputy chief economist at Moody’s Analytics, at the 2025 Lyons Center for Economic Education and Entrepreneurship (CEEE) Economic Forecast in February at the University of Delaware to share their economic predictions for the year.
While data suggests that the economy is gradually recovering from the pandemic, the panelists urged business leaders to remain cautiously optimistic due to persistent uncertainty. Their insights were followed by a panel discussion moderated by Nick Timiraos, chief economics correspondent for The Wall Street Journal.
More than 300 attended the event hosted at the Audion at UD’s STAR Campus. Attendees were a cross-section of UD students, faculty and staff; local and regional business leaders; community members; and educators. They listened to the panel members unpack the most critical economic trends, challenges and opportunities that could impact everything from global markets to local businesses.
The annual Economic Forecast is co-hosted by Lyons Companies and UD’s CEEE at the Alfred Lerner College of Business and Economics. Now in its 20th year, the event not only provided valuable economic analysis but also reflected on the legacy of those who have shaped it, particularly honoring community leaders who have contributed to its success. This year’s event also featured remarks from Timothy Lyons and David Lyons Jr., sons of the late David Lyons, who founded the event in 2006.
Inflation: a lingering concern with signs of improvement
Harker addressed a topic weighing on many Americans: inflation. Although it remains elevated at 3%, he reassured attendees that the Federal Reserve is making progress toward reducing the Personal Consumption Expenditures (PCE) inflation rate to its target of 2%.
DeRitis echoed this sentiment but warned that certain costs — including homeowners and auto insurance, as well as prices for vehicles, gas and groceries — could reaccelerate.
“Clearly, we have to keep a close eye on inflation, but assuming those are temporary factors, our expectation is we will continue to see a slow but steady decline,” deRitis said, referencing Moody’s Analytics data.
Regarding monetary policy, Harker noted that the Fed reduced the policy interest rate to its current range of 4.25% from 4.5% in late 2024 and chose to maintain it at the first Federal Open Market Committee (FOMC) meeting of 2025.
“The policy rate remains restrictive enough to continue putting downward pressure on inflation while not negatively impacting the rest of the economy,” Harker said.
While the CPI increased by 0.5% in January, Harker cautioned against overreacting to short-term data.
Economic growth shows resilience
Despite inflationary pressures, the panelists expressed cautious optimism about overall economic health. Entering 2025, the economy continued to build on the momentum of the previous year, with GDP growth steady at approximately 2.4% to 2.5%. The labor market has largely stabilized, mirroring pre-pandemic employment trends.
DeRitis highlighted data showing that the economy is adding an average of 200,000 new jobs per month. However, he acknowledged that job growth is slowing. Harker reassured attendees that this deceleration does not signal a decline.
“Yes, the number of monthly new jobs is lower than in recent years, but I would not confuse deceleration with decline,” he said.
DeRitis explored factors influencing this slowdown, noting that businesses are approaching hiring with caution amid economic uncertainty. While sectors such as healthcare, retail and social services are expanding, industries like construction, manufacturing and transportation are seeing declines. However, he emphasized that companies have not yet resorted to the widespread layoffs typical of a recession.
Despite positive job growth, Harker acknowledged that many Americans are still feeling financial strain.
“At the micro level, not every American family or business may be feeling this way. They’re not feeling the similar optimism. They feel inflation, and they feel it in very, very real terms,” said Harker, highlighting that many Delawareans are struggling with home affordability as measured by the Atlanta Fed’s Home Ownership Affordability Monitor. “So as policymakers, we still have a lot of work to do.”
Consumer confidence and market uncertainty
While economic indicators suggest stability, consumer sentiment remains mixed. Farr illustrated this uncertainty by polling the audience on whether they believed the economy was strong; less than half responded affirmatively.
DeRitis noted that uncertainty itself can become a risk factor.
“If households pull back on spending and businesses delay investments, that could slow growth or even trigger a recession,” he warned. He referenced Moody’s Analytics risk matrix, which outlines threats to the economy, and advised businesses to “worry intelligently” by focusing on the most probable risks.
One such risk is stock market volatility. DeRitis explained that household consumption, which drives two-thirds of the U.S. economy, has been bolstered by rising home and stock values. However, if markets correct sharply, high-income consumers may cut spending, negatively impacting economic growth. Additionally, he pointed to new tariffs as a potential disruptor, emphasizing that their full impact remains uncertain.
“The market hates uncertainty and hates to be surprised,” Farr added.
Harker’s legacy in economic education
In addition to his economic insights, Harker was honored with the James B. O’Neill Award for his commitment to economic education. The award, named after the longtime UD professor, recognizes those who promote economic, personal finance and entrepreneurship education. Harker is retiring from his position with the Philadelphia Fed in June. He previously served as UD’s president.
Carlos Asarta, James B. O’Neill Director of UD’s CEEE, praised Harker’s dedication to supporting K-12 educators and fostering economic literacy.
“Clearly, this exemplifies his exceptional dedication to our work in education,” Asarta said. “That dedication has made a tremendous difference in supporting our goal to see students graduate as informed and productive citizens, contributing to their own prosperity and the well-being of the world.”
Accepting the award, Harker underscored the importance of economic education.
“The young people in this country — and the country as a whole — need this education,” he said. “We are the economy, and we make decisions collectively as American citizens. Those decisions should be informed by what we know works and what doesn’t.”