The U.S. economy is defying expectations, and the International Monetary Fund is taking notice.

With strong consumer demand, supportive financial conditions, and a shifting policy landscape, the IMF now sees U.S. growth accelerating in 2025. Europe and China, meanwhile, struggle to gain momentum.

Betting markets are also adjusting, pricing in higher odds of an economic boom under a second Trump term.

In its January update to the flagship World Economic Outlook, published Friday, the Washington-based institution raised its 2025 U.S. growth projection by 0.5 percentage points to 2.7%, the highest upward revision among major economies.

By contrast, the eurozone saw a 0.2 percentage-point downgrade to 1% growth. Germany's forecast slashed by 0.5 percentage points to a sluggish 0.3%. China's outlook improved only marginally, ticking up 0.1 percentage points to 4.7%.

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US Economy Set For Another Strong Year Of Growth

“Momentum in the United States remained robust, with the economy expanding at a rate of 2.7% in year-over-year terms in the third quarter, powered by strong consumption,” the IMF said.

The strength is driven by a resilient consumer, looser financial conditions, and a surging stock market.

The S&P 500 index — as tracked by the SPDR S&P 500 ETF Trust ( SPY ) — has rallied by 50% over the past two years.

The IMF highlighted additional upside growth risks, including fiscal stimulus and deregulation.

“Looser fiscal policy in the United States, driven by new expansionary measures such as tax cuts, could boost economic activity in the near term,” the report said.

It also indicated that “confidence and positive sentiment in the United States, partly driven by deregulation, could boost both the demand and the supply side of the economy.”

Yet, the Washington-based also signaled caution. “Excessive rollback of regulations designed to put limits on risk-taking and debt accumulation may generate boom-bust dynamics for the United States in the longer term,” it wrote.

Betting Markets Are Betting On A Trump Boom

Betting markets as tracked by CFTC-regulated Kalshi show a 17% chance of a U.S. recession in 2025, which represents a steep drop from mid-2024 levels.

The shift in sentiment has coincided with Trump's victory at the November presidential election, as investors expect fresh stimulus policies, including deregulation and tax cuts.

A key question is whether a true economic boom could emerge.

Kalshi shows a 56% probability that at least one quarter between 2025 and 2028 will see GDP growth exceed 5%. That outcome would signal an unusually strong expansion.

Current betting-market pricing on GDP growth appears instead more conservative, with traders estimating 2025 growth at 2.4%.

Kalshi's markets offer a payout of $5 per dollar wagered for those betting on growth between 2.6% and 3%. It’s a range that would align with the IMF's 2.7% forecast.

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