U.S. Economic Growth Gets a Boost: Fitch Upgrades GDP Outlook for 2025-2026

AirdropHunterZhang · 2026-01-12T20:13:58+00:00

Fitch Ratings has upgraded its U.S. GDP growth projection for 2025 to 2.1%, with inflation expected to rise to 3.0% by the end of that year. The labor market remains stable, maintaining a jobless rate of 4.6%, while the Fed is anticipated to cut interest rates in early 2026.

AirdropHunterZhang

2026-01-12 20:13:58

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Fitch Ratings has raised its growth expectations for the U.S. economy following a reassessment of delayed economic data from last year’s government shutdown. The rating agency now projects U.S. GDP expansion will reach 2.1% in 2025, marking a meaningful upward revision from the 1.8% forecast issued previously. Looking ahead to 2026, growth is expected to strengthen to 2.0%, up from the earlier 1.9% estimate.

Inflation Pressures Intensifying Through 2026

The inflation picture remains complicated due to incomplete October data, making near-term CPI trends difficult to assess. Fitch’s analysis suggests the Consumer Price Index will climb to 3.0% by end-of-year 2025, compared to 2.7% recorded in November. The outlook grows more challenging in 2026, with inflation projected to reach 3.2% by year-end, primarily driven by the delayed impact of tariff implementations expected throughout the year.

Labor Market Stability Despite Headwinds

Employment growth has moderated, yet this weakness is expected to be partially counterbalanced by a concurrent slowdown in labor force expansion. Despite these cross-currents, the jobless rate is anticipated to settle around 4.6% throughout 2026, maintaining relatively stable levels versus current conditions. This relatively steady unemployment projection suggests the U.S. labor market will avoid significant deterioration despite recent hiring weakness.

Fed Policy Shift on the Horizon

In response to evolving economic conditions, the Federal Reserve is expected to implement two interest rate cuts during the first half of 2026. These moves would lower the federal funds rate ceiling from current levels to 3.25%, signaling a shift toward monetary accommodation as growth moderates and inflation dynamics unfold.

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