The double-whammy that's about to hit the US economy
The US economy faces a potential downturn as consumer spending slows due to inflation and geopolitical uncertainty, compounded by the Federal Reserve's interest rate hikes. While official projections remain optimistic, analysts warn that the combination of these factors could lead to higher unemployment and tighter financial conditions.
Why it matters
The potential for a 'double-whammy' economic squeeze threatens the stability of the US market and global economic growth forecasts.
iStock; Tyler Le/BI If you ask most economists, market experts, and even the Federal Reserve, the story of the US economy for the rest of 2026 will be one of strong and steady growth. But there are serious reasons to doubt this forecast of calm waters. There's no better example of the sanguine consensus view than the Fed's latest Summary of Economic Projections, released as part of the central bank's meeting on Wednesday. According to the FOMC's rundown, no participants saw the risks to GDP growth as tilted to the downside. Meanwhile, after this week's interest rate hike — the first in three years — investors and analysts don't really see the Fed taking much more action. In the face of buoyant growth predictions and strong financial conditions, the market is priced for another two rate hikes between now and March, not much else.
Get smarter about the news
Sign up free for a feed built around what you actually care about, Dive Deeper research on any story, and the full text of every article.
Create free accountAlready have an account? Sign in