US Macro FAQs and Forecasts

UBS forecasts US growth will moderate to 2% in 2026 as fiscal support fades, with the Fed delaying its first rate cut to December 2026 due to sticky inflation and geopolitical uncertainty.

Key Takeaways

• 1.US growth is expected to remain resilient at approximately 2% in 2026, supported by firm private demand and loose financial conditions despite oil price headwinds.
• 2.The Federal Reserve is expected to remain in 'wait-and-see' mode, with the first interest rate cut now projected for December 2026.
• 3.Headline inflation is forecast to peak above 4% in the near term due to energy costs, while core PCE is tracking at 3.3%.

Table of Contents

• Macro outlook: Loose financial conditions continue to support growth
• Growth: Multiple drivers enough to offset negative oil impact
• Oil: Prices could weigh on growth, but starting conditions were strong
• Tariffs: Trade policy effects are expected to taper
• Labor: April job growth was strong, unemployment stabilizing
• Consumption: Remains solid, aided by wealth effects and tax cuts
• Investment: Starting to broaden out more
• Inflation: Headline to peak over 4% due to higher oil prices
• Rates: Fed rate cuts should continue, but the conflict may cause delays
• 10 US Economy FAQs
• Rates: What is the Fed watching and what conditions need to be in place for cuts?
• Productivity: What are US productivity trends?
• Oil: How has the US economy become more resilient to energy shocks?
• AI: How rapid is business AI adoption?
• AI: Where is AI showing up in labor market data?
• Consumption: What's the status of the OBBBA retroactive tax cuts?
• Investment: How's the breadth of investment evolving?
• Inflation: How are the drivers of service inflation trending?

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