The Organisation for Economic Co-operation and Development (OECD) has had to dramatically adjust its economic outlook for the United States. Growth of just 1.6% for this year and even a bit less—1.5%—in 2026. The OECD has cautioned against increasing uncertainty in global markets. This variability is due in large part to President Donald Trump’s tariff policies.
On Thursday, the OECD published a somewhat more positive report in which it sharply raised its 2025 U.S. growth forecast. That new prediction is down to 2.2%, largely because of concerns over persistently high inflation that may end up being 4% by the close of 2023. The outlook for global economic growth has been downgraded in recent months. It is now forecast to only rise to 3% in 2026, lowered from the earlier forecast of 3.1% for this year.
The ambiguities that come with rapidly shifting tariff negotiations have caused turmoil in domestic and global markets alike. The OECD stated that “higher trade costs, especially in countries raising tariffs, will push up inflation, although their impact will be offset partially by weaker commodity prices.” This serves as a reminder of the tightrope that all economies have to walk between trade changes and the free movement of people.
The OECD’s first assessment of 2023 shows a more entrenched slowdown in global economic growth. They forecast the drop to continue from 3.3% in 2024 down to roughly 2.9% this year and in 2026. This projection is contingent on one very large assumption: that the current tariff rates established by mid-May remain in place. This is the case despite ongoing legal challenges.
As economic forecasts continue to develop, the consequences of these predictions hang over the heads of market participants and policymakers. The ambiguity associated with tariff changes makes the forecast for inflation and growth more difficult to discern, both nationally and globally.