S&P Global U.S. Forecast Update August 2026

S&P Global have released their August 2026 forecast update for the U.S. economy. The near-term forecast was revised up due to stronger-than-expected growth in the second quarter of 2026 and improved outlooks for consumer spending in the third quarter. However, this momentum hinges on the development of conflicts in the Middle East, performance of equity markets, and data revisions. 

Real GDP growth is forecast to stay at 2.1% in 2026 before picking up to 2.3% in 2027, compared to 2.8% in 2024 and 2.1% in 2025. On a quarterly basis, the forecast calls for real GDP to increase through 2036 (no recession).

Headline CPI inflation is forecast to rise to 3.2% in 2026 due to high energy prices, before easing to 2.2% in 2027. It had previously come down to 2.7% in 2025 from the spike in 2022 to 8.0%.

The unemployment rate is forecast to maintain 4.3% in 2026 and rise to 4.3% in 2027. It started to pick up in 2024 and rose to 4.3% in 2025, compared to the sub-4% readings in 2022 to 2023 following the peak at 8.1% in 2020.

Nonfarm payroll job growth is forecast to continue decelerating, slowing to 0.3% in 2026, before slowing to 0.1% in 2027. Nonfarm payroll jobs grew 1.2% in 2024 and 0.5% in 2025, compared to the more robust growth previously. 

Housing starts are forecast to change little at 1.37 million in 2026 before decreasing to 1.33 million in 2027, as affordability and demographic trends take a toll on the housing market. Starts have been moderating in recent years since the surge to 1.61 million units in 2021. Activity remained strong in 2022 at 1.55 million, fell to 1.42 million in 2023, and stabilized at 1.37 million in 2024 and 1.36 million in 2025. 

The baseline forecast (summarized above) is assigned a 50% probability. The pessimistic scenario is assigned 25%, and the optimistic scenario is assigned the remaining 25%. These probabilities are unchanged from the prior forecast.

The current forecast is based on the following assumptions:

• Oil prices: Brent crude oil prices were estimated at $63 in 2025Q4, $78 in 2026Q1, and $97 in 2026Q2. They are now forecast to average $87 per barrel in 2026, before easing to an average of $80 in 2027, compared to $87 and $82, respectively, in June’s forecast.
• Monetary policy: The Fed left rates unchanged at the July meeting, in line with expectations. With inflation peaking lower and labor markets’ outlook improved slightly, the Fed is expected to remain on hold until June 2027. The Fed cut twice in 2027, in June and December, reaching the long-run “neutral” range of 3.00-3.25% afterwards.
• Federal fiscal policy: The forecast includes the direct effects of the partial government shutdown that ended November 12, 2025, and the One Big Beautiful Bill Act (OBBBA), which indefinitely extends cuts to marginal personal tax rates enacted in the 2017 Tax Cuts and Jobs Act and adds new deductions for tip income and overtime pay, among other personal tax provisions. The OBBBA includes increased federal direct spending but reduces outlays for Medicaid, ACA insurance premium tax credits, and SNAP benefits. It also introduces new expensing provisions and expanded deductions for businesses and corporations, while rescinding most of the clean-energy tax credits introduced by the Inflation Reduction Act.
• Population: Deportations, combined with a sharply reduced inflow of immigrants, will lower U.S. aggregate supply and aggregate demand. This forecast assumes net international migration will be reduced, relative to Census projections, by roughly 500,000 per year over the four years of the Trump presidency.
• Tariffs and trade: This forecast incorporates the existing Section 232 tariffs, along with new Section 232 tariffs of 10% on critical minerals effective in the first quarter of 2027. In the forecast, the replacement of the IEEPA tariffs with Section 122 tariffs lowers the effective statutory tariff rate by about 4 percentage points. As a result, the forecast assumes that the effective tariff rate converges to approximately 10%.
• Global outlook: Real foreign GDP was estimated to grow 2.6% in 2025, before slowing to 1.8% in 2026 and rebounding to 2.3% in 2027. Foreign CPI inflation was estimated at 2.4% in 2025 and is expected to accelerate to 2.7% in 2026 and 2027. Foreign sovereign bond yields are projected to average 3.3% over 2026-2027.

Exhibit 1 summarizes the August 2026 forecast from S&P Global. Exhibit 2 shows the July 2026 projections, and Exhibit 3 shows the difference. 

Exhibit 1: S&P Global August 2026 Forecast for the U.S., Over-the-Year Percent Change or Level

Exhibit 2: S&P Global July 2026 Forecast for the U.S., Over-the-Year Percent Change or Level

Exhibit 3: Differences in S&P Global U.S. Projections: August 2026 Versus July 2026 (Percentage Point Differences, Except for Housing Starts)