1、University of Michigan,Ann Arbor Department of Economics 611 Tappan Avenue Ann Arbor,MI 48109-1120 lsa.umich.edu/econ/rsqe 734-764-2567 For Release:11/21/2024 The Michigan Model Gabriel M.Ehrlich,Director George A.Fulton&Saul H.Hymans Directors Emeriti The U.S.Economic Outlook for 20252026 Jacob T.B

2、urton,Gabriel M.Ehrlich,Kyle W.Henson,Daniil Manaenkov,Niaoniao You,and Yinuo Zhang University of Michigan Executive Summary All Things Considered As the Fed proceeds with its cutting cycle amid a cooling labor market,we expect real GDP to grow at an annualized pace of 2.3 percent and the unemployme

3、nt rate to average 4.2 percent in 2024Q4.We project a modest deceleration of economic growth to accompany the less dynamic labor market over the near term.However,the solid momentum of real final sales to private domestic purchasers,helped by growth in real income,is likely to persist,supporting sol

4、id real GDP growth.As the stimulative effects of the expected tax cuts dominate the drag from the anticipated new tariffs,we project quarterly GDP growth to accelerate modestly during 2026,reaching a 2.5 percent annualized pace by 2026Q4.Consumption Momentum:Revised and Reinforced The recent large u

5、pward revision of personal income data since 2022 explains the resilience of consumption growth in the face of higher interest rates.Higher income and meaningful real wage gains going forward will likely support robust spending growth in the near term.No Halloween Haunt for the Labor Market The labo

6、r market is looking less worrisome after some jump scares in the third quarter.The unemployment rate dipped to 4.1 percent in September and held there in October,down from the recent high of 4.3 percent in July.However,the trend pace of job gains is likely still decelerating even after accounting fo