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12 December 2025 / Article
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Copy LinkThe US economy is heading into 2026 with heightened uncertainty due to the effects of evolving policy decisions. We maintain our expectation of slower growth through late 2025 and early 2026 because of tariffs, even though we slightly upgraded growth in H2 2025. Fiscal policy will deliver mixed effects next year: growth support from accelerated depreciation and tax cuts will be partially offset by reduced green investment and cuts to Medicaid and Supplemental Nutrition Assistance Program (SNAP). The monetary policy outlook will depend heavily on the composition of the Fed under a new chairperson. The mid-term elections at the end of the year could prompt some federal government stimulus to address “affordability” concerns, creating upside risks to growth. Meanwhile, widespread hiring freezes and recent announced layoffs create downside risks to the current low-churn equilibrium in the labor market. The Conference Board still expects real GDP growth to weaken amid a fragile balance of resilient labor markets and softening consumer demand due to tariff-induced inflation. PCE inflation is projected to peak slightly above 3% y/y in H1 2026 before easing to 2.3% by year-end, with unemployment rising toward 4.7% in early 2026.2026: A Year Defined by Policy Crosswinds
The Fed delivered another 25bp rate cut at the December 9–10, 2025 meeting, bringing the target range to 3.50–3.75%. Chair Powell emphasized that policy is now “within the range of plausible neutral estimates,” and the meeting revealed a materially more divided Committee.
Further cuts would require noticeable weakening in the labor market, in our view. October and November federal government data may prove to be inconclusive, because collection was affected by the government shutdown. The Fed may need to see December data, released in the beginning of 2026, to decide whether to pause or cut in January.
Our baseline remains that the Fed will cut two more times in H1 2026 as past tariff actions weigh on the economy and unemployment edges higher. Depending on the 2026 FOMC composition, additional easing in H2 is possib
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PRESS RELEASE
LEI for Mexico Ticked Down in November
December 17, 2025
PRESS RELEASE
LEI for the Global Economy Decreased in September
December 16, 2025
PRESS RELEASE
LEI for the Euro Area Declined in November
December 16, 2025
PRESS RELEASE
LEI for Brazil Increased in November
December 15, 2025
PRESS RELEASE
The LEI for the UK ticked down in October
December 15, 2025
PRESS RELEASE
LEI for Australia Increased in October
December 12, 2025
All release times displayed are Eastern Time
Note: Due to the US federal government shutdown, all further releases for The Conference Board Employment Trends Index™ (ETI), The Conference Board-Lightcast Help Wanted OnLine® Index (HWOL Index), The Conference Board Leading Economic Index® of the US (US LEI) and The Conference Board Global Leading Economic Index® (Global LEI) data may be delayed.
This report identifies trends to help businesses prepare for an environment with more challenges for labor and capital but improvements in productivity growth.
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