Real GDP growth in 2026 is projected to be stronger in the current projections, partly because of the effects of the 2025 reconciliation act. In
In the United States, a modest economic tailwind fueled by expansionary fiscal policies and rate cuts will help push growth to 2.2% in 2026, write RSM US Chief Economist Joe Brusuelas and Economist Tuan Nguyen. * **Australia:** The economy will remain resilient amid global uncertainties, producing steady but modest growth of 2%, writes RSM Australia economist Devika Shivadekar. For this reason, we are attaching a 25% probability that growth will increase to 2.5% or higher as inflation eases and the Fed pushes its policy rate to 3% more quickly than investors are pricing in. Should productivity improve, those gains would create the conditions for a quicker return to the Fed’s 2% inflation target, which would provide the ingredients for stronger growth, lower Fed rates and a decline in the 10-year Treasury yield. The combination of a loosening labor market, slower pay growth and lower inflation will allow the Bank of England to cut interest rates in December and potentially twice more next year, taking rates to 3.25%.
Global GDP growth is projected to remain broadly stable at 2.9% in 2026 before edging up to 3.0% in 2027, sustained by robust technology
[ World Economic Outlook Global Economy in the Shadow of War April 2026](https://www.imf.org/-/media/Files/Publications/WEO/2026/April/English/text.ashx). [ World Economic Outlook Global Economy in Flux,Prospects Remain Dim October 2025](https://www.imf.org/-/media/Files/Publications/WEO/2025/October/English/text.ashx). [ World Economic Outlook A Critical Juncture amid Policy Shifts April 2025](https://www.imf.org/-/media/Files/Publications/WEO/2025/April/English/text.ashx). [ World Economic Outlook Steady but Slow:Resilience amid Divergence April 2024](https://www.imf.org/-/media/Files/Publications/WEO/2024/April/English/text.ashx). [ World Economic Outlook Navigating Global Divergences October 2023](https://www.imf.org/-/media/Files/Publications/WEO/2023/October/English/text.ashx). [ World Economic Outlook A Rocky Recovery April 2023](https://www.imf.org/-/media/Files/Publications/WEO/2023/April/English/text.ashx). [ World Economic Outlook War Sets Back the Global Recovery April 2022](https://www.imf.org/-/media/Files/Publications/WEO/2022/April/English/text.ashx). [ World Economic Outlook Recovery During a Pandemic October 2021](https://www.imf.org/-/media/Files/Publications/WEO/2021/October/English/text.ashx). [ World Economic Outlook Managing Divergent Recoveries April 2021](https://www.imf.org/-/media/Files/Publications/WEO/2021/April/English/text.ashx). [ World Economic Outlook The Great Lockdown April 2020](https://www.imf.org/en/Publications/WEO/Issues/2020/04/14/weo-april-2020). [ World Economic Outlook Update Still Sluggish Global Growth July 2019](https://www.imf.org/en/Publications/WEO/Issues/2019/07/18/WEOupdateJuly2019). [ World Economic Outlook Growth Slowdown, Precarious Recovery April 2019](https://www.imf.org/en/Publications/WEO/Issues/2019/03/28/world-economic-outlook-april-2019). [ World Economic Outlook Challenges to Steady Growth October 2018](https://www.imf.org/en/Publications/WEO/Issues/2018/09/24/world-economic-outlook-october-2018). [ World Economic Outlook Cyclical Upswing, Structural Change April 2018](https://www.imf.org/en/Publications/WEO/Issues/2018/03/20/world-economic-outlook-april-2018). [Analytical Groups](https://data.imf.org/en/Datasets/WEO/Groups-and-Aggregates-April-2026)[Regional Groups](http://www.imf.org/external/datamapper/region.htm).
* [*BRC Ratings – S&P Global](https://www.spglobal.com/ratings/en/regulatory/article/economic-outlook-us-q2-2026-curb-your-enthusiasm-s101676533). [Current Oil Price Surge To Weigh On Growth](https://www.spglobal.com/ratings/en/regulatory/article/economic-outlook-us-q2-2026-curb-your-enthusiasm-s101676533). [Baseline Forecast: Temporary Energy Shock, Forecast Conviction Low](https://www.spglobal.com/ratings/en/regulatory/article/economic-outlook-us-q2-2026-curb-your-enthusiasm-s101676533). [Inflation: Higher Energy Cost On Top Of Already Elevated Core](https://www.spglobal.com/ratings/en/regulatory/article/economic-outlook-us-q2-2026-curb-your-enthusiasm-s101676533). Before the war broke out, we were expecting to increase our growth forecast for this year closer to 2.5% on higher-than-expected growth in the second half of last year, looser financial conditions, lower uncertainty, larger assumptions for household tax refunds and big-tech AI spending, and steady growth in the first two months, as indicated by high frequency weekly economic indicators (see “[U.S. Real-Time Data: Energy-Related Inflation Risks Rise Against Steady Growth Momentum](https://www.spglobal.com/ratings/en/regulatory/article/-/view/sourceId/101672676)," March 20, 2026). * [U.S. Real-Time Data: Energy-Related Inflation Risks Rise Against Steady Growth Momentum](https://www.spglobal.com/ratings/en/regulatory/article/-/view/sourceId/101672676), March 20, 2026. * [S&P Global Ratings Raises 2026 Oil Price Assumptions On Longer-Than-Expected Oil Flows Disruption](https://www.spglobal.com/ratings/en/regulatory/article/-/view/sourceId/101675235), March 16, 2026. * [Economic Research: New U.S. Inflation Risks Emerge While Price Pressures Build For Producers](https://www.spglobal.com/ratings/en/regulatory/article/-/view/sourceId/101672683), March 3, 2026.
Most members clearly weighted the risks to the labor market more heavily than those of inflation, including Fed Chair Jerome Powell, though he did so while chanting the mantra that “there is no risk-free path for policy.” [[1](https://siepr.stanford.edu/publications/policy-brief/us-economy-2026-what-watch#1)]. Taken together, this research finds little indication that AI has impacted aggregate U.S. labor market conditions so far.[[8](https://siepr.stanford.edu/publications/policy-brief/us-economy-2026-what-watch#8)] Although unemployment has increased, it has risen most among workers in occupations with the least AI exposure, suggesting that other factors are at play. As two of us (Bernstein and Cummings) have written,[[11](https://siepr.stanford.edu/publications/policy-brief/us-economy-2026-what-watch#11)] there are certainly bubbly features: Valuations of AI-exposed firms have risen sharply even as revenue from AI-specific products and services remains limited. For example, Joseph Briggs of Goldman Sachs estimates[[12](https://siepr.stanford.edu/publications/policy-brief/us-economy-2026-what-watch#12)] that generative AI could create $8 trillion of value for U.S. firms through labor productivity gains. Analysis suggests that higher wholesale power costs, investment to replace aging grid infrastructure, extreme weather events, state policies such as net-metered solar and renewable energy standards, and rising demand from data centers and electric vehicles have all contributed to higher prices.[[14](https://siepr.stanford.edu/publications/policy-brief/us-economy-2026-what-watch#14)].
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”The U.S. labor market remains fundamentally resilient, albeit transitioning toward a slower growth phase.”. While these headwinds are likely to weigh modestly on consumption, they are not expected to fundamentally alter the expansionary backdrop created by the One Big Beautiful Bill Act, particularly as robust AI‑related capital expenditures continue to provide an important offset and remain a central pillar of growth momentum in 2026. We continue to view the labor market as fundamentally resilient, albeit transitioning toward a slower growth phase, and we have thus revised our year‑end 2026 unemployment rate forecast to 4.6% from 4.2%. We have revised our year‑end 2026 core inflation forecast up by 0.2 percentage points, driven by renewed firmness in non‑housing services, incremental tariff pass‑through, and higher energy prices amid escalating geopolitical tensions involving Iran. While we retain our expectation for a single policy rate cut in 2026—consistent with the Federal Reserve’s willingness to look through energy‑driven price shocks—the principal risk has shifted toward a longer period of policy inertia, particularly if labor market cooling remains gradual and inflation progress proves uneven.