The Fragile Outlook of the U.S. Economy in 2026

The analytical platform Project Syndicate, in a report assessing the outlook of the U.S. economy, stated that America’s entry into 2026 will be accompanied by rising structural risks and economic instability, to the extent that even optimistic scenarios point to persistent uncertainty.

According to the report, although the Trump administration views its economic performance in 2025 as successful, purchasing power has become one of the main concerns for American households, with dissatisfaction over rising prices increasing even among the president’s supporters.

Project Syndicate analysts argue that the Trump administration’s costly fiscal policies, combined with weakened budgetary discipline, have kept price levels high and seriously disrupted efforts to curb inflation.

The report also notes that the continuation of U.S. tariff policies has not only increased production costs but has also raised the prices of certain consumer goods, including food, without reducing the trade deficit or reviving industrial production—placing additional pressure on American consumers.

Referring to high interest rates, the report emphasizes that the stabilization of 30-year mortgage rates above 6 percent has made access to housing more difficult for a significant portion of U.S. citizens and has intensified the housing affordability crisis.

The report warns that political pressure on the U.S. Federal Reserve and the erosion of its independence could heighten inflation expectations and lead to increased volatility in financial markets, particularly in equities and asset markets.

In conclusion, the report states that if current approaches continue, the U.S. economy in 2026 will face a combination of fragile growth, potential inflation, market volatility, and financial shocks—conditions that could further undermine economic stability ahead of the midterm elections.
/ Tasnim