U.S. Economic Growth Slows Amid Tariff Pressures: A 2025 Outlook

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📉 U.S. Economic Growth Slows Amid Tariff Pressures: A 2025 Outlook As 2025 unfolds, the U.S. economy is showing signs of strain amid a global slowdown and heightened trade barriers. Here's a detailed look at the latest forecasts and implications based on insights from the OECD, Federal Reserve, and key market indicators . 📊 1. U.S. Growth Forecast Downgraded by OECD The Organisation for Economic Co-operation and Development (OECD) has revised the U.S. GDP growth forecast for 2025 to 1.6% , down from 2.8% in 2024 . The forecast for 2026 remains muted at 1.5% , reflecting persistent uncertainty driven by: Elevated trade barriers Reduced consumer spending power Sluggish business investment 💸 2. Tariffs Fueling Inflation & Trade Costs The average U.S. tariff rate has climbed to 15.4% , the highest level since 1938 . These tariffs have raised import costs, which are now being passed on to consumers: Projected consumer price inflation is expected to rise to...
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Economic appraisal

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Economic appraisal is a key component of project management. It involves the assessment of the economic viability of a project, including its costs, benefits, and risks. Economic appraisal helps project managers to make informed decisions about whether to proceed with a project, and to identify and manage potential risks.

There are several tools and techniques that can be used for economic appraisal in project management.

 Some of these include:
  • Cost-Benefit Analysis (CBA): This is a technique used to compare the costs of a project with its expected benefits. The benefits are expressed in monetary terms, and the analysis helps to determine whether the project is economically viable.
  • Net Present Value (NPV): This technique calculates the present value of future cash flows, taking into account the time value of money. It helps to determine whether a project will generate a positive or negative return on investment.
  • Internal Rate of Return (IRR): This technique calculates the rate at which the present value of the expected future cash flows equals the initial investment. It helps to determine whether a project is financially viable.
  • Payback Period: This is the amount of time it takes for a project to recoup its initial investment. It helps to determine the time it takes for a project to become profitable.
  • Sensitivity Analysis: This is a technique used to assess the impact of changes in key assumptions on the economic viability of a project. It helps to identify potential risks and uncertainties.
By using these tools and techniques, project managers can conduct a thorough economic appraisal of a project and make informed decisions about its viability.

Suppose you are considering investing in a project that requires an initial investment of $100,000 and is expected to generate cash flows of $30,000 per year for the next five years. To determine whether the investment is financially viable, you need to calculate the net present value (NPV) of the project using a discount rate of 10%.


Using a financial calculator or spreadsheet software, the NPV of the cash flows can be calculated as follows:

NPV = -$100,000 + $30,000/(1+10%) + $30,000/(1+10%)^2 + $30,000/(1+10%)^3 + $30,000/(1+10%)^4 + $30,000/(1+10%)^5

NPV = $10,659.72

The positive NPV indicates that the project is expected to generate a return that exceeds the cost of capital, assuming a discount rate of 10%. Therefore, the investment is considered financially viable.

If the discount rate were increased to 15%, the NPV of the project would decrease, as shown below:

NPV = -$100,000 + $30,000/(1+15%) + $30,000/(1+15%)^2 + $30,000/(1+15%)^3 + $30,000/(1+15%)^4 + $30,000/(1+15%)^5

NPV = -$3,055.96
In this case, the negative NPV indicates that the project is not expected to generate a return that exceeds the cost of capital, assuming a discount rate of 15%. Therefore, the investment is not considered financially viable.

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