While the U.S. economy has weathered many storms over the past few years, warning signs are flashing for 2026 that deserve attention. Despite headlines about economic rebounds, several concerning trends are quietly developing beneath the surface.
Warning signs are flashing for 2026 as concerning economic trends quietly develop beneath the surface of recent rebounds.
Economic growth is expected to slow markedly in 2026. Most experts predict GDP growth between 1.5% and 2.2%, which falls below the healthy 2% trend the country typically enjoys. The Conference Board sees growth dropping from 1.8% in 2025 to just 1.5% in 2026. If tough budget cuts happen, RSM US warns growth could plummet to a mere 0.8%. That’s like a car running on fumes instead of a full tank.
Meanwhile, a tricky situation called “stagflation lite” is emerging. This means the economy grows slowly while prices keep rising stubbornly. RBC Economics expects this challenging combo in 2026, with inflation staying above 3% yearly. UCLA Anderson predicts inflation could hit 3.5% early in the year, driven partly by tariffs making goods more expensive. This puts the Federal Reserve in a tough spot, like trying to fix a leaky roof during a rainstorm.
The job market tells another worrying story. Unemployment has already climbed about 100 basis points from its 2022 low and reached 4.4% by September 2025. UCLA Anderson expects it to hit 4.5% by late 2025, while RSM projects it rising above 5% in early 2026. The first eight months of 2025 saw sustained job losses, marking what economists call an employment recession. Core services excluding housing are unlikely to see deflation due to wages maintaining sector prices.
Government policies are adding extra pressure. Higher tariffs and stricter immigration rules created a 1% drag on growth in 2025, according to RSM. A record 43-day government shutdown added another 1.5% hit in the fourth quarter. These policy headwinds continue affecting supply chains and raising costs for businesses and consumers.
The combination of slower growth, persistent inflation, rising unemployment, and policy uncertainty creates a challenging environment. Many corporations are likely preserving their retained earnings as a financial buffer against these economic headwinds rather than expanding operations or increasing dividends. Interestingly, massive AI infrastructure investment exceeding $405 billion is providing a significant counterbalance to these economic headwinds. While the economy isn’t in crisis, these warning signs suggest 2026 could test America’s economic resilience in unforeseen ways.
