Survey of Professonal Forecasters May 2026 Indicate Some Softening of the Economy, Higher Inflation, and Possible Contraction

(Illustrative Only)

Something doesn't 
smell just right 
in the market. 

Forecasting uses past and current data to make informed predictions about future economic conditions. In the case of the U.S. economy, recent indicators suggest a generally stable but unremarkable environment—neither particularly strong nor clearly weak. Growth has been steady, but there are signs that momentum is softening.

According to the Survey of Professional Forecasters May 2026, real GDP is expected to grow around 2.2% in 2026, which reflects modest expansion but not especially strong performance. This aligns with broader signals of slowing economic momentum observed over recent quarters.

The unemployment rate is projected to remain relatively stable, suggesting limited movement in labor market conditions. In practical terms, this points to a “wait and see” job environment where significant changes in hiring or layoffs are not widely expected in the near term.

At the same time, inflation (as measured by CPI) is expected to run somewhat higher than previously forecast. That implies continued upward pressure on prices, which can affect household purchasing power, borrowing costs, and credit card debt burdens.

There are also some downside risks in the outlook, including the possibility of occasional negative GDP quarters later in the forecast horizon. While not the baseline expectation, this signals that short-term contractions cannot be ruled out.

Overall, the picture is mixed: stable employment, moderate growth, and persistent inflation pressures, combined with some uncertainty about downside risks. This environment makes careful monitoring of economic trends especially important when making financial or business decisions.

U.S. Economic Outlook Softens: Key Takeaways from the Q2 2026 Survey of Professional Forecasters

• The Philadelphia Fed’s Survey of Professional Forecasters shows a weaker near-term U.S. growth outlook compared with the previous quarter.
• Real GDP is expected to grow about 2.2% in 2026 (annual average), a downward revision of 0.3 percentage points from the prior survey.
• Forecasters expect slower growth in each of the next several quarters, signaling a softening momentum in economic activity.
• Q2 headling inflation rose to 6%.
• The unemployment rate is projected to remain relatively stable, rising modestly from about 4.4% to 4.5% into early 2027.
• Inflation expectations for 2026 have been revised higher, especially in the short run, with CPI inflation expected to run above prior estimates.
• Forecasters see a higher probability of elevated inflation in 2026, including greater chances of CPI running above 3%.
• The risk of a negative GDP quarter rises in later periods of 2026, indicating increased downside risk to growth.

Federal Reserve Bank of Philadelphia. (2026, May 15). Second quarter 2026 survey of professional forecasters. https://www.philadelphiafed.org/surveys-and-data/real-time-data-research/spf-q2-2026