GDP Growth of US economy to slow down gradually to 1.6% by 2027 from 2.8% now: S&P Global

The report predicts that the country's GDP growth will decline from 2.8 per cent in 2024 to 1.9 per cent in 2025 and 2026, followed by 1.6 per cent growth in 2027.

It said "S&P Global Market Intelligence forecasts 1.9 per cent US GDP growth in 2025 followed by 1.9 per cent growth in 2026; expects the Fed to hold until December 2025".

The report also noted that the slower growth forecast for 2025 is mainly due to weaker economic activity in the first half of the year. It stated that the harsh winter weather had a significant impact, reducing the growth forecast for personal consumption expenditures (PCE) in the first quarter by 1.1 percentage points.

Additionally, expected federal layoffs are likely to lower second-quarter GDP growth by 0.3 percentage points.

Ben Herzon, Senior US Economist at S&P Global Market Intelligence, said "The markdown to growth this year is fully accounted for by weaker growth over the first half of this year. Unseasonably harsh winter weather contributed to a 1.1 percentage point markdown to our first-quarter forecast of PCE growth".

The report also highlighted that the changes in trade policies as a key factor affecting economic growth.

The effective tariff rate on imports from mainland China, which is currently around 30 per cent, is expected to rise to 45 per cent by June. Tariffs on Canada and Mexico are also expected to be implemented as planned.

The report also mentioned that inflation in the US economy remains a concern, with core PCE inflation expected to increase this year.

As a result, the report stated that the Federal Reserve is likely to keep interest rates unchanged until December 2025.

The report suggested that slower economic growth, higher unemployment, and rising inflation could create challenges for the US economy in the coming years.

However, policymakers will be closely watching these trends to make necessary adjustments to support economic stability. (ANI)