"Global growth is predicted to drop to 2.9% while U.S. growth is set to hit 1.5% in 2026, a significant decrease from the respective 3.3% and 2.8% growth in 2024. The major threats leading to the decrease in growth prospects are tariffs, immigration changes, and inflation, according to the OECD's latest report. Fallout from tariffs is especially salient, the OECD warned."
"President Trump since returning to office in January has increased tariffs for trading partners across the board with some countries facing duties as high as 50%. America's effective tariff rate of 19.5%, the highest since 1933, is already affecting spending choices, labor markets, and consumer prices, the OECD claimed, but more fallout is on the way. "The impacts of higher tariff rates are yet to be fully felt in the US economy," the organization wrote in its Tuesday report."
"The Paris-based organization claimed the full effect of tariffs is yet to hit because many of the changes are being phased in over time and some companies, at least initially, are absorbing the higher costs. Yet, the effects are already starting to seep into the labor market as evidenced by the Fed's decision last week to lower interest rates, and Fed chairman Jerome Powell's observation that young people especially are finding it difficult to land a job."
Tariffs, immigration changes, and inflation threaten to slow global growth to about 2.9% and U.S. growth to about 1.5% by 2026, down from 3.3% and 2.8% in 2024. U.S. effective tariff rates have risen to 19.5%, the highest since 1933, and some trading partners face duties up to 50%, raising costs for businesses and consumers. Many tariff increases are being phased in while firms initially absorb expenses, delaying full impact. Early signs include weakening labor-market conditions, a recent Fed rate cut, and warnings of layoffs as firms seek to protect profit margins.
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