US GDP Growth to Slow as S&P Projects Economic Challenges

The US economy's GDP growth is expected to decline over the next three years, from 2.8% in 2024 to 1.6% in 2027. According to S&P Global Market Intelligence, this slowdown is driven by harsh winter conditions, federal layoffs, and rising trade tariffs, challenging economic stability amidst increasing inflation and unemployment.

According to a recent report by S&P Global Market Intelligence, the US economy is set to experience a gradual slowdown in GDP growth over the next three years. The report forecasts a decline from 2.8% in 2024 to 1.6% in 2027. This expected slowdown poses significant challenges to the broader economic landscape.

The report highlights several factors contributing to this anticipated deceleration. Notably, harsh winter weather conditions have been cited as a major factor, reducing personal consumption expenditures' growth forecast in the first quarter by 1.1 percentage points. Additionally, federal layoffs are predicted to cut GDP growth in the second quarter by 0.3 percentage points.

Changes in international trade policies are also anticipated to impact economic growth severely. The effective tariff rate on imports from China is projected to rise from 30% to 45% by June, with additional tariffs on Canada and Mexico expected to proceed. These changes, coupled with concerns about core PCE inflation rising, are likely to keep the Federal Reserve's interest rates steady until December 2025 as the economy grapples with these multifaceted challenges.

(With inputs from agencies.)