A new report from the nonpartisan Congressional Budget Office predicts increasing jobless rates and inflation and lower overall growth in 2025 before an improvement next year as a result of President Donald Trump’s tariff policy, immigration crackdowns and sweeping tax and spending law, according to the Associated Press.
The CBO on Friday released new economic projections for the next three years, updating its initial outlook released in January, prior to Trump’s inauguration.
Overall, the CBO expects real GDP growth to decrease from 2.5% in 2024 to 1.4% in 2025, a downgrade from the initial projection of 1.9%.
The CBO attributed the expected decline to a slowdown in consumer spending stemming from new tariffs and a decrease in immigration. However, GDP is set to grow to 2.2% in 2026.
Unemployment is expected to hit 4.5% in 2025 — higher than the 4.3% initially expected — and 4.2% in 2026 — slightly down from the 4.4% originally expected.
The CBO predicts that inflation will hit 3.1% for the rest of 2025, up from its 2.2% projection in January, before lowering to 2.4% in 2026.
The CBO outlook aims to set expectations for the economy to inform choices made by congressional and executive branch policymakers.
