Wall Street economists are forecasting modest growth and stronger inflation, according to the mid-year survey of their forecasts by the U.S. Securities Industry and Financial Markets Association (SIFMA).
The latest edition of the industry trade group’s biannual survey of chief U.S. economists at more than 20 financial institutions found the median forecast for U.S. GDP growth is just 0.9% for the fourth quarter of 2025. That’s down from 2.5% in the same period last year and from 1.9% in the previous forecast last December, before the U.S. launched its global trade war.
“The economy has downshifted sharply since the second half of 2024, as big changes in tariffs, trade policy, immigration, federal tax and spending policies are taking centre stage while the Federal Reserve and monetary policy take an unfamiliar backseat,” said Scott Anderson, co-chair of the SIFMA Economist Roundtable and chief U.S. economist and managing director at BMO Capital Markets, in a release.
“Until the dust settles — especially around tariff policy and interest rates — the economic and inflation uncertainty they generate will remain a big part of our economic and financial future,” he said.
Core inflation is now forecast to finish the year at 3.1%, up by 0.7 percentage points from the previous SIFMA survey, driven by increased tariffs.
Amid expectations for weaker growth and higher inflation, the U.S. economy is facing what the survey calls “stagflation light” — but it is not currently expected to fall into outright recession.
Overall, the survey found that 70% of economists put the probability of recession between 30% and 50%.
“Although recession risks remain elevated, panellists don’t expect tariffs to reach the heights seen on April 2 and aren’t likely to trigger an outright recession this year or next,” said Anderson.
Against this backdrop, Wall Street is expecting rate cuts this year.
The survey found that 75% of economists expect at least one rate cut this year, with the median forecast calling for rates to drop by 50 basis points by year-end and to decline another 25 basis points in 2026.