Economists Lift U.S. Growth Outlook but Turn Cautious on Jobs, NABE Survey Shows
U.S. economic growth forecasts have strengthened modestly even as hiring expectations have softened, according to the latest quarterly survey from the National Association for Business Economics (NABE). The poll of 40 professional economists points to a more optimistic growth trajectory but slower labor market momentum as policymakers navigate the late stages of the expansion.
Economists now expect the U.S. economy to grow 1.8% this year, up from the 1.3% forecast in June, signaling greater confidence that the economy will continue expanding despite higher borrowing costs and persistent trade headwinds. “The median forecasts for economic growth for 2025 and 2026 have been revised upward from those in the June NABE Outlook Survey, although nearly all panelists still expect tariffs to be a drag on activity,” said Emily Kolinski Morris, CBE, NABE President and Global Chief Economist at Ford Motor Company.
The outlook for job creation, however, has deteriorated. Monthly payroll gains are expected to average just 29,000 for the remainder of 2025—a steep decline from the 87,000 projected in June. For the full year, economists anticipate an average of 60,000 jobs added per month, with the pace only modestly improving to 75,000 in 2026, well below last quarter’s 97,000 forecast. The unemployment rate is projected to rise to 4.5% through next year, slightly better than the 4.7% expected in the prior survey but consistent with a cooling labor market.
On inflation, the NABE panel sees gradual progress toward the Federal Reserve’s 2% target. The Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge, is now forecast to end 2025 at 3.0%, a slight improvement from 3.1% in June’s survey. Inflation is projected to cool further to 2.5% by the end of 2026, suggesting a slower normalization path than previously expected.
“The inflation forecast for this year remains elevated,” said Kathy Bostjancic, NABE Outlook Survey Chair and Chief Economist at Nationwide. “While inflation is projected to cool to 2.5% by the end of 2026, this still exceeds the Fed’s 2% target.”
Survey participants also expect the Federal Reserve to deliver one more rate cut this year, lowering the federal funds rate by 25 basis points before year-end. That aligns with the Fed’s cautious tone but falls short of market expectations: CME’s FedWatch Tool indicates traders are pricing in two quarter-point cuts in 2025.