Inflation is one of the most important issues of the economy and it affects product prices and services every day. By 2026, experts expect the U.S. economy to increase a bit more than before, although job growth will remain slow and prices will stay relatively high. So, let’s explain everything very clearly.
Inflation
What an issue, huh? Let’s start by saying what inflation means: it measures how fast prices increase with the passage of time. Economists expect inflation to end this year at about 2.9%, which is slightly below the 3% predicted in October. For 2026, inflation is expected to fall only slightly to 2.6%. Import tariffs are partly responsible for higher prices, contributing between 0.25% and 0.75% to inflation.
There’s also the term sticky inflation, which means prices are not expected to drop quickly. Even if the economy grows slightly, the cost of goods and services will remain relatively high, affecting everyday life for families.
Slightly higher economic growth
Economists surveyed by the National Association for Business Economics believe the U.S. economy will increase about 2% in 2026, which is a bit more than the 1.8% predicted in October and much higher than the 1.3% projected in June. This growth will be mainly come from:
- More consumer spending: people are expected to buy more goods and services.
- Increased business investment: companies will spend more on equipment, technology, and buildings.
However, there are also factors that could slow growth:
- Import tariffs: new taxes on products from other countries could reduce growth by around 0.25% or more.
- Stricter immigration enforcement: could reduce the number of workers available for the economy.
If productivity improves, which means if workers produce more in an efficient way, the growth could be higher than expected.
Job growth and unemployment
It’s great the economy is expected to grow a little, isn’t it? Unfortunately, job growth will likely be slow, with around 64,000 new jobs each month. We have to say that this is a bit faster than what was expected at the end of this year, but still lower than in past years.
It’s estimated that the unemployment rate will reach 4.5% at the beginning of 2026, and remain stable the entire year. This means that, even though the economy slightly improves, not everyone will experience big changes when it comes to job opportunities.
Federal Reserve and interest rates
Due to inflation still being high and unemployment increasing just a bit, the Federal Reserve (Fed) is expected to act cautiously:
- December 2025: a small cut of 0.25 percentage points.
- 2026: another small cut totaling 0.5 percentage points, bringing rates closer to a “neutral” level.
Neutral rates are where borrowing costs neither speed up nor slow down the economy too much.
So…
As we are almost ending the year 2025, next year seems to be a better year in terms of the economy. However, there will still be some challenges: jobs might not grow very fast, and prices could stay higher than usual because of inflation. So, what does all of this mean? Basically, that families may still feel the pinch of rising costs.
But don’t worry! Because not everything is bad, understanding things like growth, jobs, and inflation can help people know what to expect. So, what’s the best thing you could do? It’s easy: pay attention to the economy. This way, you can make better choices with your money and feel more ready for whatever the year brings. Are you ready for 2026?