NABE GDP Growth Forecasts for 2025 & 2026 Edge Higher

The National Association for Business Economics expects real GDP to grow 2.0% in 2025, revised from 1.8% expected in the October survey, and 1.9% in 2026, revised from 1.7%. These growth rates compare to 2.8% in 2024. Growth from Q4-to-Q4 is expected to slow to 1.8% in 2025, revised from 1.3%, and an unrevised 1.9% in 2026. These increases compare to 2.4% y/y in 2024. Quarterly GDP is expected to grow 2.8% in Q3’25, 1.0% in Q4’25, 1.5% in Q1’26, 1.9% in Q2’26 then by 2.0% in both of the following two quarters.

Expected real growth in personal consumption expenditures in 2025 was increased to 2.5% from 2.0% and raised to 1.8% from 1.6% in 2026. The projection for business fixed investment growth was unchanged at 3.8% this year, then raised to 2.4% from 1.7% growth in 2026. An expected 1.9% decline in residential fixed investment this year was deepened from -1.6%, followed by 0.1% growth in 2026, which was revised from 0.4%. Estimates of government spending growth of 1.3% this year and 0.9% in 2026 were unchanged.

The net export deficit is expected to widen to $1.125 trillion in 2025, revised from $1.113 trillion expected earlier, then narrow to $1.037 billion in 2026, revised from $1.024 trillion. Exports should increase a little-revised 0.6% this year, then 0.5% in 2026, revised from 1.1%. Imports are projected to rise an unchanged 2.8% in 2025, then fall a little-changed 1.4% in 2026. Inventory accumulation should edge lower this year to an unchanged estimate of $40 billion, down from $43.5 billion in 2024, then slow $28.0 billion in 2026, revised from $34.0 billion estimated earlier.

Housing starts are expected to remain fairly steady at 1.36 million in 2025, revised from 1.35 million, then hold steady at an unrevised 1.35 million in 2026. They have been trending lower since their 2021 peak of 1.60 million. Light vehicle sales should rise slightly this year to 16.1 million, revised from 16.0 million units, then ease to 15.8 million next year, revised from 15.5 million estimated earlier. The average gain in payroll employment should weaken to 57,000 per month in 2025, revised from 62,000, then rise to 64,000 in 2026, revised from 99,000. These gains compare to 168,000 per month in 2024. The unemployment rate expectation in 2025 was changed to 4.3% from 4.2% estimated earlier, and should move up to an unchanged estimate of 4.5% in 2026.

Inflation pressures are expected to eventually abate. After falling in 2024 to 2.7% (Q4/Q4), the increase in the CPI is forecast to first rise to an unchanged estimate of 3.0% this year, then ease to a minimally changed 2.7% in 2026. These increases compare to a 7.1% rise in 2022. Price inflation as measured by the PCE chain price index, is expected to rise 2.9%, Q4/Q4 in 2025, revised from 3.0%, then fall to a minimally changed 2.6% in 2026. It reached 6.0% in 2022. The gain in the chain PCE price index excluding food & energy is projected to steady at 3.0%, revised from 3.1% this year, then fall to 2.6% in 2026, revised from 2.5%. The index rose to its high of 5.2% in 2022. The estimated cost of crude oil of $62 per barrel at the end of this year compares to $64 per barrel last projected. The estimated $64 per barrel at the end of next year was unchanged and compares to $70 per barrel at the end of 2024.

Interest rates on a 10-year Treasury note are expected to dip. The forecast of 4.09% on 10-year Treasuries at the end of this year compares to 4.14% expected earlier, and 4.05% at the end of next year, compared to 4.08% previously projected. The Fed is expected to continue its easing of monetary policy. The Federal funds rate is forecast to be 3.63% at the end of 2025, compared to 3.87% expected earlier, versus 4.38% at the end of 2024. It should then fall to an unrevised 3.13% by the end of 2026. After-tax corporate profits are predicted to rise 2.3% this year, revised from 3.9%, and 3.5% next year, revised 2.9% expected earlier.

The figures from the latest NABE report can be found in Haver's SURVEYS database.