The Organisation for Economic Co-operation and Development (OECD) has sharply downgraded its U.S. growth forecast, citing economic uncertainty and the impact of President Donald Trump’s tariff policies.
The OECD now expects the U.S. economy to expand by just 1.6% in 2025 and 1.5% in 2026, a significant cut from its previous estimate of 2.2% for 2025.
The report highlights several factors contributing to the slowdown, including elevated policy uncertainty, reduced net immigration, and a shrinking federal workforce.
The OECD also warns that higher trade barriers could further dampen business confidence and investment.
Global growth projections have also been revised downward, with the OECD stating that the slowdown is most pronounced in North America, particularly in the U.S., Canada, and Mexico.
The organisation reportedly notes that U.S. tariff-related disruptions are expected to push inflation higher, although weaker commodity prices may offset some of the impact.
The OECD’s latest outlook underscores the growing challenges facing the U.S. economy as trade tensions persist.
With tariffs fluctuating due to ongoing ‘stop start’ legal interventions, businesses and investors remain cautious about the future.
The coming months will be crucial in determining whether policymakers can stabilise growth and restore confidence in the market.
Stop the tariffs and all will be fine.