Speaking before a Dubuque crowd Thursday, an economic expert expressed a feeling of cautious optimism for the year ahead while also noting political uncertainties that remain.

Economist Kevin Depew was the featured speaker at Dubuque Area Chamber of Commerce’s 2025 Forecast Luncheon, which drew roughly 260 people to the Reflections event space at Q Casino + Resort.

Depew, of San Diego, serves as deputy chief economist and leader of the Industry Eminence Program at RSM US, which provides middle-market focused assurance, tax and consulting services. Standing before representatives from across Dubuque’s business community, he shared what people could expect this year.

“In 2025, we’re coming off two really strong (fiscal) quarters,” he said. “The combination of current growth dynamics and the fiscal expansionary policies we’re expecting to see this year … indicate an economy that has the potential to grow above trend.”

Per RSM’s baseline forecast, which it estimates to be the most likely, Depew said the U.S. economy is expected to see full-year gross domestic product growth of 2.5%. He estimated that federal interest rates will be cut no more than twice in the calendar year, ending up around 4%.

Growth will be driven by the relative cooling of inflation, he said, as well as the expected fiscal stimulus of the new presidential administration and the deployment of cost-saving technologies in various industries nationwide.

The demand for labor will remain strong, Depew projected, and nationwide unemployment will hover around 4.2%. Inflation is expected to keep at or near the 2.5% mark, though that figure could vary by industry.

In his opening remarks, chamber Board President Chad Wolbers expressed hope that the presentation would help chamber members prepare for the year ahead and tackle some of the economic unknowns that inevitably accompany a new presidential administration.

“Whether it’s tariffs, taxes or the freezing of funds, there’s a lot to unpack in forecasting this year’s economic outlook,” Wolbers said. “… Knowledge is the power and helps you make informed decisions to support your success.”

Depew highlighted those uncertainties in his presentation Thursday and spent time discussing the potential impacts of President Donald Trump’s proposed tariff policy.

Both in the lead-up to Election Day and since his win, Trump has highlighted plans to implement sweeping tariffs on goods imported into the U.S.

Tariffs act as a sort of import tax and are paid by the companies ordering goods, who then oftentimes pass the cost down to customers in the form of higher prices. While Trump’s exact plans have not been finalized, the second-term president has floated tariffs of up to 60% on goods from China and up to 25% on goods from countries such as Mexico and Canada.

Depew said those plans could have a dampening effect on the U.S. economy as companies increase prices to absorb the cost of the potential tariffs or of retaliatory measures taken by other countries in response to U.S. tariffs.

“As an economist, I cannot make a case that higher tariffs, longer term, will do anything but pass through higher costs to the U.S. consumer,” Depew said.

In a situation in which a 25% across-the-board tariff was implemented in addition to a 60% tariff on Chinese-made goods — a setup that Depew described as “the worst-case scenario” — he said the U.S. economy could see up to a 2% GDP reduction over the next 10 years.

The actual tariff figures will likely be lower, Depew stressed, but the model used the most drastic proposal to allow for any necessary contingency planning.

He added, however, that tariffs can result in positive impacts that are not easily captured on a balance sheet when used as a bargaining chip to discourage other countries from acting in a way that is detrimental to the U.S.

Drew Townsend, president and CEO of Dubuque Bank & Trust, attended the forecast luncheon with a few of his colleagues and said he found Depew’s talk generally in line with the sentiments and expectations of the bank’s customers.

“In connecting with our customer base, I would agree that we’re looking forward to a more stable year,” Townsend said. “He touched on the uncertainties that remain, … but it seems cautiously optimistic.”