Economic Forecast for the US Economy

The Conference Board Economic Forecast for the US Economy

August 08, 2025

Tariff Reality to Weigh on Growth; Lower Uncertainty to Provide Offset

Higher tariffs are set to weigh on real GDP growth in H2 and into 2026, as consumers bear the brunt of higher prices. Businesses will navigate the tariff landscape with more clarity than was the case earlier this year. Even though tariffs could eat into their profit margins, accelerated depreciation, one of the key provisions in the latest fiscal legislation, could incentivize business investment in the coming months. TCB estimates the bulk of tariff impacts to affect Q4 and early 2026. Given this outlook, we anticipate the FOMC will likely resume cutting interest rates this December. A sharp worsening in labor market conditions is a downside risk for an earlier cut in either September or October. As the Fed continues to cut policy rates next year, growth is projected to rebound, but the extent of the recovery will likely be capped by social benefit cuts towards the end of 2026.