NABE Annual Survey: U.S. Economic Growth to Accelerate Slightly Next Year, But Inflation May Remain Elevated

On November 24th, the National Association for Business Economics (NABE) announced in its annual forecast survey that the growth rate of the U.S. economy will slightly pick up next year. However, job growth will remain sluggish, and the Federal Reserve will slow down the pace of further interest rate cuts. This survey involved 42 professional forecasters. The results show that the median economic forecast is 2% growth, which is higher than the 1.8% from the October survey. The expected increase in personal spending and business investment will drive economic growth higher. But professional forecasters almost unanimously believe that the new import tariffs of the Trump administration will drag down the growth rate by at least 0.25 percentage points. The survey report stated, "Respondents consider that the 'tariff impact' is the greatest downside risk to the U.S. economic outlook." Stringent immigration enforcement is also regarded as a factor inhibiting economic growth, while productivity improvement is considered the most likely factor to drive economic growth higher than expected. In addition, it is expected that inflation at the end of this year will be 2.9%, which is slightly lower than the 3% forecast in the October survey. Next year, it is expected to decrease slightly to 2.6%, and tariffs will contribute 0.25 to 0.75 percentage points. Measured by historical standards, job growth is still expected to be relatively moderate, with about 64,000 jobs added per month, which is well below recent averages. The unemployment rate is expected to rise to 4.5% in early 2026 and remain at that level throughout the year. As inflation remains high and the unemployment rate only rises slightly, the Fed is expected to cut interest rates by 25 basis points in December. But it is expected to cut only another 50 basis points next year and approach the rough neutral level of monetary policy. (Jin10)