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Here’s the good news: The Organization for Economic Cooperation and Development says that economic growth in 2025 is going to be better than originally projected.
Here’s the bad news: The US is about to feel the tariff pain.
The US economy will grow 1.8% this year, according to the OECD, up from its previous forecast in June that the economy would only grow 1.6%. But in 2026, the research organization projects that growth rate will fall to 1.5%—a number that remained flat since June. That’s all compared to the US economy’s 2.8% expansion last year.
Globally, the OECD now expects a growth rate of 3.2%, again better than its June prediction of 2.9%. It also now projects headline inflation to hit 3.4% across G20 nations this year, slightly below its June projection of 3.6%.
The slowdown ahead is due, of course, to tariffs. “The full effects of tariff increases have yet to be felt – with many changes being phased in over time and companies initially absorbing some tariff increases through margins – but are becoming increasingly visible in spending choices, labour markets and consumer prices,” the OECD wrote.
Then again, the organization also added that a global AI boom, the front-loading of trade before the tariffs actually hit, and economic expansion in emerging markets were partially responsible for raising global growth projections this year.
More good news
While the global economy has been more resilient in the face of steep tariffs so far, the OECD warned that there are already cracks emerging—and that things could take a turn for the worse.
“Looking ahead, downside risks loom large: further tariff hikes, increased concerns about fiscal risks, renewed inflation pressures could weigh on growth,” the report noted. “Financial market repricing, including of volatile crypto-assets could pose additional financial stability concerns.”
But hey, at least now we can blame tariffs for all our problems next year, like why we’re always late to meetings or losing the TV remote.—LB