Forecast: Stubborn Inflation but Better Growth

By the Editorial Team · Thursday, July 16, 2026

A survey of 72 economists predicts the U.S. economy will face continued inflation with consumer prices rising 3.4% over the next year, alongside moderate GDP growth just above 2% in 2026. This outlook reflects reduced recession risk and highlights the impact of geopolitical tensions with Iran and evolving Federal Reserve policies on inflation and economic stability.

The U.S. economy is expected to experience a combination of persistent inflation and moderate growth over the next year, according to a survey of 72 economists conducted earlier this month. The panel anticipates consumer prices will rise by 3.4% in the 12 months ending December, reflecting continued inflationary pressures despite improving economic conditions.

This forecast incorporates the ongoing effects of the conflict involving Iran, which forecasters identified as a factor contributing to elevated inflation levels. At the same time, the outlook for economic expansion remains steady, with real gross domestic product (GDP) projected to grow slightly above 2% in 2026. The survey’s economic growth projection for the fourth quarter stands at 2.1% year-over-year, a modest increase from the 2% forecast made in April.

The survey also indicates a reduced probability of recession in the coming year. Forecasters now assign a 25% chance of a downturn, down from 33% in the previous assessment conducted in April. This is the lowest recession risk reported since early 2025.

The data collection took place prior to the release of the latest Labor Department figures, which showed a 3.5% increase in the consumer-price index (CPI) over the 12 months through June, a slight decline from May’s 4.2% inflation rate. It also preceded the recent breakdown of a ceasefire between the United States and Iran, an event likely to influence future economic conditions.

On the Federal Reserve’s preferred measure of inflation—the personal consumption expenditures (PCE) price index excluding volatile food and energy prices—the panel projects a 3.2% rise year-over-year in the fourth quarter, up from the 2.9% forecast in April. This suggests that core inflation remains elevated despite recent easing in headline figures.

The survey further explored opinions on the Federal Reserve’s monetary policy and communication strategy. With Fed Chairman Kevin Warsh having proposed a reduction in “forward guidance” regarding future interest rates, respondents were asked about the desirability of such a shift. Results showed mixed views on current interest rate policies: 65.6% of economists deemed them appropriate, while a minority considered them either too loose or too restrictive.

Regarding the Fed’s autonomy, a majority of panelists expressed confidence in its independence from political influence, though debates about its role and decision-making process persist.

Overall, the survey portrays a U.S. economy navigating persistent inflationary challenges alongside steady, if unspectacular, growth prospects, amid uncertainty driven by geopolitics and central bank policy adjustments.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.