US Economic Outlook 2026: Growth Expected, Recession Risk Moderate

Economic forecasts for the U.S. in 2026 show cautious optimism with a majority of experts anticipating economic growth rather than a recession. GDP growth estimates have improved from 1.3% to a median of 2%, with some analysts predicting up to 3%, driven largely by sustained consumer spending and easing inflation. Tax cuts passed by Congress and regulatory clarity are expected to bolster consumer spending power and corporate investment, supporting overall economic activity. The economic growth outlook remains volatile due to factors such as the 43-day government shutdown in late 2025, which dampened growth projections. Analysts highlight a divided economy where wealthy households maintain spending levels, but lower-income groups face challenges from high prices and interest rates, potentially limiting broad-based consumer demand critical for sustained job creation. Risks that could trigger a recession include persistently high inflation exacerbated by elevated tariffs and reduced immigration. Tariffs are expected to remain high despite some new trade agreements, while immigration decline reduces labor supply, increasing wage pressures and inflation. Deloitte projects slower growth of around 1.4%, impacted by these inflationary pressures and demographic shifts. Corporate investment in AI and technology continues to be a growth driver, but a downturn in corporate earnings and increased layoffs could slow economic momentum by reducing consumer confidence and spending. Current layoff trends reflect normalization after pandemic-era hiring surges rather than signs of broad economic distress. The evolving gig economy is anticipated to provide some mitigation against labor market contractions by offering alternative income sources. However, the primary concern remains the potential for rising unemployment to temper economic growth. Overall, while the risk of recession is not dismissed, the baseline expectation is moderate growth supported by fiscal stimulus, business investment, and consumer spending patterns.