Real GDP growth in the United States will slow from 2.5% in 2024 to 1.4% in 2025, according to projections by the Congressional Budget Office (CBO).

The U.S. GDP is characterized by its global leadership, supported by a large domestic market. In addition, technological innovation stands out as an engine of growth. Finally, sectoral diversification stands out, with a strong emphasis on services, advanced manufacturing, and finance.

Real GDP in the United States

The Royal Bank of Canada anticipates slow growth in the U.S. economy for the remainder of the year. The main cause is the tariffs imposed by the Trump administration, which raise costs and slow down domestic production.

According to the CBO, the decline in real GDP reflects a slowdown in consumer spending. These tariffs increase the prices of goods and services, reducing the purchasing power of households.

At the same time, tariffs make imported inputs more expensive for businesses. They also raise production costs for those competing with foreign goods. As a result, competitiveness is limited and pressure on economic activity is exacerbated.

In addition, a reduction in net immigration in 2025 leads to slower overall growth in consumer spending. In 2026, real GDP growth will increase to 2.2% in the CBO projections. 

That growth is driven by changes made by the 2025 reconciliation law, which reduces personal income tax liabilities and allows for the full accounting of certain capital investments. 

Defense spending

The CBO projects that these provisions will boost consumer spending and stimulate private investment. In addition, additional federal funding for defense, border security, and immigration enforcement will increase real purchases of goods and services in 2026.

However, the slowdown in the growth of the noninstitutionalized civilian population will limit the overall growth of consumer spending. This factor acts as a brake in a scenario that would otherwise show greater economic dynamism.

U.S. GDP grew 3.0% in the second quarter of 2025, after contracting 0.5% in the first quarter. The initial decline was in response to an increase in imports prior to the planned tariffs and their subsequent decline, which drove the rebound.

In the labor market, the unemployment rate reached 4.2% in July, just above June’s 4.1% and unchanged from the previous year. However, job vacancies are declining and the pace of job creation is losing momentum.

The Royal Bank of Canada forecasts that the unemployment rate will increase moderately throughout 2026, in an environment of slower economic growth and gradual adjustments in the country’s productive activity.