National Economy Snapshot

The National Economy

The United States heads into 2026 after a 2025 year that generally beat expectations, marked by solid consumer spending, robust investment in artificial intelligence, and a labor market that remained tighter than many analysts expected. According to the OECD, real GDP growth is projected to slow from around 2% in 2025 to 1.7% in 2026, before stabilizing near 1.9% in 2027 as temporary drags fade. This deceleration reflects cooling job gains, reduced immigration flows, and the pass‑through of higher tariffs into consumer prices.

Growth and Output

Economic growth in 2026 is expected to remain positive but subdued. The U.S. Chamber of Commerce forecasts growth of at least 2%, roughly in line with the average of major forecasters. While this is below the rapid post‑pandemic rebound, it still signals a stable expansion. Solid business investment continues to support productivity.

Labor Market

The labor market remains a pillar of economic strength, though signs of cooling are evident. Slower employment growth is expected as the economy normalizes, and as federal workforce reductions take effect. Wage growth is moderating but still outpacing inflation in many sectors, supporting consumer spending. However, affordability challenges, especially in housing, remain a central concern for households. There appears to be somewhat of a split in the labor market, with higher-paying white-collar jobs harder to come by, while many lower-paying entry level and labor jobs are in surplus with businesses struggling to fill these positions, often taken in the past by foreign-born workers.

Inflation and Prices

Inflation pressures have eased significantly from their 2022–2023 peaks. Tariff increases implemented through 2025 pushed prices higher, but core inflation is projected to move closer to the Federal Reserve’s long‑run target, giving policymakers more flexibility. Still, elevated shelter costs and energy price volatility could complicate the path forward.

Fiscal and Trade Policy

Fiscal policy is shifting toward restraint. Large cuts to non‑defense discretionary spending are expected to weigh modestly on growth in 2026. At the same time, the tariff regime introduced in 2025 continues to reshape trade flows. Despite steep tariffs, the economy showed surprising resilience in 2025, with growth accelerating and inflation remaining relatively muted. Over time, however, higher import costs may pressure both consumers and manufacturers.

Overall, the U.S. economy in 2026 is best described as stable but cautious—resilient enough to avoid recession yet facing structural challenges that will shape the next phase of growth.