Deloitte Insights has released its third quarter United States Economic Forecast, noting that the future path of the U.S. economy hinges largely on how tariffs and immigration play out, with each shaping growth, prices and investment in different ways. Here is a summary of Deloitte's report.

Since June, economic uncertainty has intensified, prompting three updated forecast scenarios—baseline, downside and upside. These are not precise predictions but tools to frame possible outcomes for the U.S. economy.

Baseline: The forecast assumes tariffs remain elevated, with the average rate easing from 18.6% in August to about 15% by mid-2026. Net migration is revised sharply lower, from 6.8 million to 3.3 million adults through 2030, reducing long-term output. Consumer spending slows as higher tariffs lift inflation and weaker immigration curbs growth, while AI-related business investment remains strong. GDP growth dips to 1.4% in 2026 before recovering modestly.

Downside: A steeper rise in tariffs (to 20%), zero net migration and Fed policy missteps drive the economy into recession by late 2026. Inflation accelerates before easing, and unemployment averages 5% in 2027.

Upside: Tariffs fall to 7.5% by 2026 and immigration rebounds, lifting demand. Softer inflation allows more Fed rate cuts, consumer spending holds up, and business investment accelerates, with GDP growth above baseline levels in 2026–27.

Sector trends:

• Consumers: Spending remains resilient in 2025 but slows in 2026 as tariffs and high interest rates weigh.

• Housing: Mortgage rates ease slightly, but high costs restrain new construction until 2027.

• Business investment: AI continues to fuel strong spending despite headwinds.

• Trade: Elevated tariffs limit both imports and exports, raising costs for U.S. firms.

• Labor: Slowing immigration and weaker job growth push unemployment to 4.5% in 2026.

• Markets: Stocks are strong, but Treasury yields stay elevated above 4%.

• Inflation: CPI is expected to average 2.9% in 2025, rising to 3.2% in 2026 before moderating.

Overall, tariffs and immigration remain the key swing factors shaping the U.S. economic outlook over the next five years.