The Congressional Budget Office (CBO) has issued its latest outlook, warning that tariffs, tighter immigration policies, and new tax-and-spending measures will raise inflation and unemployment in the near term while slowing overall economic growth.
According to the report, U.S. GDP growth is expected to cool from 2.5% last year to about 1.4% in 2025, largely due to weaker consumer spending and higher import costs linked to tariffs.
The unemployment rate is projected to rise to 4.5%, while inflation is forecast to climb to 3.1%, both above previous estimates. CBO expects inflation to gradually ease to the 2–2.4% range over the next two years.
In the medium term, the economy is projected to regain some momentum, with GDP growth rebounding to around 2.2% in 2026, before moderating to about 1.8% in 2027 and 2028. Unemployment may improve slightly, but it is still expected to remain higher than earlier forecasts.
The CBO emphasized that policy shifts—especially trade tariffs and immigration limits—are increasing costs for businesses and consumers, weighing on short-term growth, even as longer-term stability may return.
