What is the Economic Outlook in the US For the Remainder of 2026?
US economic growth in 2026 is expected to be modest, with higher inflation, moderate unemployment, and ongoing uncertainty from tariffs, geopolitical tensions, and demographic shifts.
GDP Growth
Short-term projections indicate slower GDP growth in 2026 due to higher oil prices, tariffs, and geopolitical risks such as the conflict in Iran, which may reduce consumer spending and business investment, though domestic oil production and federal spending could partially offset these. The Congressional Budget Office (CBO) projects that real GDP growth will be slightly higher in 2026 than in 2025, as the positive effects of the 2025 reconciliation act outweigh the drag from lower net immigration and tariffs. Deloitte’s baseline forecast also anticipates moderate growth, with downside risks if AI investment slows or tariffs rise further.
Inflation
Inflation is expected to remain elevated in the short term, driven by higher energy prices, supply chain disruptions, and ongoing tariff impacts. The Federal Reserve’s December 2025 projections indicate that PCE inflation and core PCEinflation will remain above pre-pandemic levels, reflecting persistent price pressures in energy and consumer goods.
Labor Market
The unemployment rate is projected to remain moderate. The Conference Board anticipates a slight increase in unemployment due to policy uncertainty and restrained hiring, even as layoffs remain limited. The CBO expects that labor market growth will gradually improve in 2026 as trade policy uncertainty diminishes and supply chains adjust. Deloitte highlights that lower net migration could constrain labor supply, putting upward pressure on wages and potentially limiting output growth.
Interest Rates
The Federal Reserve’s projections suggest that the federal funds rate will remain at levels intended to balance inflation control with economic growth, with the median target range reflecting a cautious approach to monetary policy in 2026. Elevated borrowing costs may continue to affect residential investment and business capital expenditures.
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