2026 U.S. President’s Economic Report: Reviewing 2025’s Volatility and Predicting Steady Growth for the Next Decade

White House Council of Economic Advisers (abbreviated as CEA) issues its annual report, analyzing how the U.S. economy performed in 2025 after being impacted by policy changes and the government shutdown. The document states that even though the market experienced volatility in the short term, the United States’ economy will enter a period of stable growth lasting more than a decade, driven by the deployment of artificial intelligence, the One Big Beautiful Bill Act, and tightened immigration policies.

2025 Real GDP Volatility Analysis

In 2025, the growth rate of the U.S. real gross domestic product (Real GDP) was 2.0%, lower than 2.4% in the previous year. The slowdown in growth reflects the negative impact caused by a federal government shutdown in the fourth quarter. Performance varied significantly across quarters: in the first quarter, GDP fell by 0.6%. The main driver was that businesses brought in large quantities of imported goods ahead of time in anticipation of new tariffs taking effect in April, which widened the trade deficit and offset growth momentum. The second quarter, however, rebounded quickly to a strong 3.8% growth. On the consumption side, real personal consumption expenditures grew by 2.1%, faster than disposable income, which grew by 1.3%. Despite a psychological effect from expectations about tariff policy—after consumption peaked in March it declined—an income tax exemption and retroactive policy for tips and overtime pay provided by the One Big Beautiful Bill Act (OBBBA) ( Note: In the past, any incidental income Americans had had to be reported for tax purposes), supported households’ willingness to spend from their income.

White House releases the 2026 Presidential Economic Report, revealing deeper ties between the One Big Beautiful Bill Act and Taiwan’s semiconductor sector

The inflation environment shows resilience

Business fixed investment performed exceptionally well in 2025, with real growth of 5.5%. Equipment investment grew by 9.5%, and intellectual property investment grew by 8.1%. The CEA said that investment related to artificial intelligence is a key driver of economic growth. In the first quarter, year-over-year growth rates for information-processing equipment and software investment reached as high as 28%. On the price front, the year-over-year inflation rate of the consumer price index (Core CPI) fell to 2.6%. Service-sector inflation slowed for the third consecutive year to 3.0%, while prices for goods showed a slight uptick. Financial markets reflected confidence in growth: the S&P 500 rose 16.4% in 2025. Although the dollar depreciated by about 8.1% versus currencies of advanced economies, its value still remained higher than pre-pandemic levels. Exchange-rate fluctuations were mainly concentrated around the times when trade policy changes were announced.

Tighter immigration policy boosts the U.S. domestic labor market

In 2025, the labor market remained stable. The unemployment rate in December was 4.4%. A shift in immigration policy toward reducing the growth of the foreign-born population led to a substantial downward revision of the monthly employment growth threshold needed to keep the unemployment rate stable. A survey by Blue Chip, a professional market forecasting organization, showed that in December 2025 this threshold fell from 170k two years earlier to about 16k per month. In 2025, average employment in the private sector increased by 25k per month, which is lower than 85k in 2024, but still enough to maintain balance in the labor market. In addition, the labor force participation rate for ages 25 to 54 (LFPR) rose to 83.6%, 1.1 percentage points higher than the 2019 average, indicating that the core working-age population’s willingness to participate in economic activity increased. On wages, real hourly pay continued to rise moderately, and productivity growth outpaced the rate of wage increases, helping ease pressure from unit labor costs.

A forecast baseline of average 3.0% growth over the next decade

The report projects that the U.S. economy will enter a stable healthy state in 2026 (Steady State). Over the 11-year period from 2026 to 2036, the average real GDP growth rate is expected to reach 3.0%. This forecast is based on labor productivity growth rates that are above the historical average, expected to be 2.9% year over year. The CEA analysis indicates that capital deepening driven by the deployment of artificial intelligence applications in the United States, deregulation, and the One Big Beautiful Bill Act will become the economy’s main driving force. The report shows that even in the face of negative effects from population aging and slower labor-supply growth due to immigration restrictions, productivity progress above historical levels can offset those negative impacts, ensuring continued economic growth. It also expects inflation to remain around the Federal Reserve’s target range, and interest rates will gradually be lowered from their 2025 peaks and move toward stability.

This article, 2026 U.S. Presidential Economic Report: Review of 2025 Volatility and Predict Stable Growth for the Next Decade, first appeared on Lian News ABMedia.