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

S&P Global have released their July 2026 forecast update for the U.S. The current forecast is based on the following assumptions:

• Oil prices: The announced Memorandum of Understanding between the U.S. and Iran contributed to the sharp declines in oil prices and a reassessment of the oil markets. 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 $82 in 2027, compared to $103 and $104, respectively, in June’s forecast.
• Monetary policy: The Fed left rates unchanged at the June meeting, in line with expectations. With inflation peaking lower and labor markets’ outlook improved slightly, the Fed is expected to pause 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 1.6% in 2026 and rebounding to 2.1% in 2027. Foreign CPI inflation was estimated at 2.4% in 2025 and is expected to jump to 3.2% in 2026 before easing to 3.0% in 2027. Foreign sovereign bond yields are projected to average 3.3% over 2026-2027.

The baseline forecast (summarized here) 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.

After increasing by 2.8% in 2024 and 2.1% in 2025, real GDP growth is forecast to slow to 2.0% in 2026 before picking up to 2.3% in 2027. On a quarterly basis, the forecast calls for real GDP to increase through 2036 (no recession).

Headline inflation gradually came down to 2.7% in 2025 since the spike in 2022 to 8.0%. It is forecast to rise to 3.4% in 2026 due to high energy prices, before easing to 2.4% in 2027.

The unemployment rate started to pick up in 2024 and rose to 4.3% in 2025, from the sub-4% readings in 2022 to 2023 following the peak at 8.1% in 2020. It is forecast to rise to 4.4% in 2026 and 4.5% in 2027 before gradually decreasing.

Nonfarm payroll jobs nationally continued to grow in 2024 and 2025, but at slower pace of 1.2% and 0.5%, respectively, compared to the robust growth previously. Nonfarm payroll jobs are forecast to grow modestly at 0.3% in 2026, before slowing to 0.1% in 2027.

Housing 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. They are forecast to fall to 1.35 million in 2026 and 1.32 million in 2027, as affordability and demographic trends take a toll on housing activity.

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

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

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

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