The National Association for Business Economics’ year-end outlook survey suggests that U.S. economic growth will pick up slightly next year, although employment gains will remain slow and the Federal Reserve will slow further interest rate cuts. The survey of 42 professional forecasters, conducted Nov. 3-11, found that the median forecast was for 2% growth, up from 1.8% in an earlier October poll and in contrast to a growth rate of just 1.3% expected in June.
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Increased personal spending and business investment are expected to lift growth, offset by what the panel said almost unanimously would be a drag on growth of a quarter of a percentage point or more from new import taxes imposed by the Trump administration. “Respondents cite the effects of tariffs as the greatest downside risk to the U.S. economic outlook, considering their likelihood of occurrence and potential impact,” the survey reported.
More stringent immigration enforcement was also seen as discouraging growth, with stronger productivity seen as the factor most likely to push growth higher than expected. Inflation is expected to end overall at 2.9%, just below the 3% expected in the October poll, and to fall only slightly to 2.6% next year, with tariffs accounting for anywhere from a quarter of a percentage point to nearly three-quarters of a percentage point of that.
Job growth is expected to remain modest by historical standards, at about 64,000 per month, faster than expected at the end of this year but well below recent standards. The unemployment rate is expected to rise to 4.5% in early 2026 and remain at that level throughout the year.
With flat inflation and another small increase in unemployment, the Fed is expected to agree to a quarter-point rate cut in December, but then cut rates by just another half-point next year, closer to what is considered a roughly neutral rate for monetary policy.
Source: Index Box Market Intelligence
