WASHINGTON— Economists advising the American Bankers Association expect the U.S. economy to continue expanding through 2026 and into 2027, though inflation is likely to remain above the Federal Reserve’s 2% target, according to the group’s latest forecast.
The ABA’s Economic Advisory Committee—made up of chief economists from major North American banks—projects real GDP growth of 2.2% in 2026 and 2.1% in 2027, slightly stronger than the outlook issued in September 2025. The forecast calls for steady expansion supported by consumer spending, business investment and a rebound in government spending following the 2025 shutdown.
“Labor market uncertainties and persistent price pressures continue to weigh on the outlook, yet the economy is still growing at a measured pace,” said Beth Ann Bovino, the committee’s chair and chief economist at U.S. Bank.
Economists expect the unemployment rate to rise modestly, peaking around 4.5% in mid-2026 before easing to roughly 4.3% by late 2027. While conditions are expected to improve somewhat, Bovino described the current environment as a “low-fire, low-hire” economy, with most job growth concentrated in healthcare.
Inflation is forecast to remain above the Fed’s target, with personal consumption expenditures—the Fed’s preferred gauge—peaking near 2.8% in the second quarter of 2026 before gradually falling to about 2.1% by the end of 2027. The committee said geopolitical risks, including tensions in the Middle East that could push oil prices higher, remain a key factor behind the outlook.