The U.S. economy is showing signs of improvement despite ongoing challenges from high inflation and increased tariffs, according to a new report by the National Association for Business Economics (NABE). The group now expects the nation’s gross domestic product (GDP) to grow by 1.8% in 2025, higher than its June forecast of 1.3%.
The NABE survey, conducted from September 17 to 25, gathered insights from 40 economists about key economic indicators such as inflation, employment, and business investment. The group also predicts that the U.S. economy will expand at a faster rate of 1.7% in 2026, up from its earlier estimate of 1.4%.
Experts say that while inflation and trade pressures continue, overall growth remains steady. Gregory Daco, vice president of NABE and chief economist at EY-Parthenon, said that after a slow start in early 2025, economic activity has picked up through the rest of the year, driven by stronger business investment.
The Federal Reserve’s policy is also expected to support growth. NABE projects that the Fed will cut interest rates further by the end of 2025 and again in 2026, easing borrowing costs for businesses and consumers.
However, there are still signs of weakness in the labor market. Job growth has slowed, and long-term unemployment has risen to its highest level in over three years. Data shows that 26% of unemployed Americans have been out of work for 27 weeks or longer.
Inflation remains another major concern. NABE forecasts that inflation, measured by the Personal Consumption Expenditure (PCE) index, will average 3% through the rest of 2025. Despite this, the group expects it to ease to 2.5% by late 2026.
Most economists agree that the U.S. economy is not headed for a recession, with the likelihood of one over the next year placed below 40%. While challenges persist, experts say steady consumer spending and business confidence could keep the recovery on track.
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