This is an excerpt from the Visa Business and Economic Insights for February 2025. For more in depth information regarding this article, download the entire report here.

Our regional forecasts indicate that all U.S. regions outperformed our economic growth expectations for Q4-2024. The pace of job creation accelerated in the final two months of the year, leading us to upwardly revise our employment growth estimates for the South and West. As a result of stronger hiring and two additional rate cuts by the Federal Reserve in the final quarter of 2024, we also lifted our estimate for Q4-2024 consumer spending growth across all regions. However, with inflation remaining stubbornly above the Fed’s target of 2 percent year-over-year (YoY) growth, we no longer expect any rate cuts in the first half of 2025. These persistently high borrowing costs will likely lead to more modest growth in interest rate-sensitive sectors through the first half of the year.

Outside of interest rates weighing on borrowing, the other major headwind for economic growth this year is tariffs. The new administration has added 25 percent tariffs across all products coming in from Mexico and Canada and it has added an extra 10 percent tariffs on top of existing tariffs to all imports from China. Additionally, the recently announced 25 percent tariffs on all imported steel and aluminum are expected to have very disparate impacts regionally. With high demand for both steel and aluminum in the manufacturing sector, we expect that the Midwest and South will be more negatively impacted by the new tariffs. Conversely, the West will likely be relatively less directly impacted. However, we expect the tariffs to lead to downstream cost increases, particularly for new autos, which we expect to hurt demand across all regions and translate into slower consumer spending growth.

The Midwest continues to take a hit from low growth and uncertainty.

According to our forecasts, the Midwest’s economic, job and consumer spending growth trailed all other regions in both Q4-2024 and 2024 as a whole. While there were bright spots in the region like Indiana and Missouri, which outpaced many other states in economic growth, overall, the region continued to struggle to overcome domestic outmigration that has constrained hiring and limited consumer demand.

The Midwest economy is set for another year of relatively sluggish growth in 2025. Persistent high interest rates, trade uncertainties, and workforce challenges will likely weigh on the region, with manufacturing-heavy states feeling the greatest impact. Illinois, Michigan, Indiana, and Ohio—key manufacturing hubs—face rising borrowing costs that dampen capital investment and hiring. Additionally, elevated auto loan rates will weaken demand, particularly hurting Michigan and Ohio, where the auto industry is a pillar of positive economic activity. Steel and aluminum tariffs are set to raise input costs on the auto industry, putting further pressure on profit margins among Midwest-based automakers. With automakers and consumers cost constrained, there is a real risk of slower hiring along with more layoffs, which would lead to slow retail and service-sector growth in the region.

While our forecasts do indicate that the Midwest will continue to trail all other regions in economic growth and job creation, there are some upside risks to our outlook. The healthcare sector is set to see steady expansion as the population ages, which will support job creation in healthcare-driven economies like Minnesota and Ohio. Additionally, investments in EV production and renewable energy in Minnesota and Missouri offer long-term potential. Finally, logistics and e-commerce are likely to strengthen Illinois and Missouri.

Overall, the Midwest faces a year of slow and uneven growth. The region’s trajectory will largely depend on federal policy decisions and their impact on inflation, trade, and investment.

Forward Looking Statements

This report may contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are generally identified by words such as “outlook”, “forecast”, “projected”, “could”, “expects”, “will” and other similar expressions. Examples of such forward-looking statements include, but are not limited to, statement we make about Visa’s business, economic outlooks, population expansion and analyses. All statements other than statements of historical fact could be forward-looking statements, which speak only as of the date they are made, are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, many of which are beyond our control and are difficult to predict. We describe risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, any of these forward-looking statements in our filings with the SEC. Except as required by law, we do not intend to update or revise any forward-looking statements as a result of new information, future events or otherwise.

For more in depth information regarding this article, download the entire report here.

About First Community Bank and Trust
First Community Bank and Trust is a privately-owned bank. Established in 1916 First Community Bank and Trust has been serving Beecher, IL, Peotone, IL and the surrounding communities for over 109 years. Our commitment to providing the best banking products and services is matched only by our outstanding customer service. We offer traditional community banking services, including mortgage, consumer, and commercial lending, as well as state of the art electronic banking services.

Press Contact:
Steve Koehn, Senior Vice President
First Community Bank and Trust
(708) 946-2246

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