"The U.S. Federal Reserve's "Summary of Economic Projections," published this week, shows that the central bank believes the economy will grow through 2028. In June, their change in GDP estimate for 2025 was 1.4%. Now, it's 1.6%. It's even rosier for 2026: 1.8%, rising to 1.9% in 2027. At the same time, the Fed sees the unemployment rate falling from 4.5% now to 4.2% in 2028."
""The problem is, the Fed's rate projection moved down in both 2025 and 2026, meaning the committee sees more rate cuts coming than it did in June. Why cut more if the economy is expected to strengthen and inflation is expected to rise? Something isn't adding up," she wrote recently. The Fed's answer is that it sees inflation declining to 2% by 2027-2028. (Exactly how the U.S. economy will chart a course through hotter growth and shrinking unemployment without triggering inflation is an open question.)"
The Federal Reserve's projections show GDP growth rising from 1.6% in 2025 to 1.9% in 2027 and continued expansion through 2028. The unemployment rate is forecast to fall from 4.5% to 4.2% by 2028. Despite stronger growth and lower unemployment, the Fed's dot plot signals interest rates declining toward about 3% over the next few years. Market reaction includes a record-high U.S. stock market and concerns about froth among some Wall Street analysts. Analysts question why the Fed plans additional rate cuts if growth strengthens and inflation risks could rise. The Fed expects inflation to return to 2% by 2027–2028.
Read at Fortune
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