Global growth forecast nudged higher alongside the U.S. upgrade, but downside risks remain.
The International Monetary Fund (IMF) has raised its U.S. economic growth outlook, citing easing trade frictions and fiscal stimulus from the One Big Beautiful Bill Act, even as the global agency warned that tariff risks and inflation pressures remain.
The IMF said in its latest World Economic Outlook (WEO) report, released on July 29, that it now expects the U.S. economy to expand by 1.9 percent in 2025 and by 2 percent in 2026. That’s up 0.1 and 0.3 percentage points, respectively, from the IMF’s projections in April, when it expected higher tariffs and tighter financial conditions than have since materialized.
The upgrade reflects a drop in the effective U.S. tariff rate to 17.3 percent from a previously expected 24.4 percent, looser financial conditions aided by a weaker dollar, and new incentives for corporate investment under the One Big Beautiful Bill Act. The IMF staff estimated that the Trump-endorsed tax-and-spending measure could raise U.S. output by about 0.5 percent on average through 2030.
The upward revision to growth for the full 2025 comes despite a brief contraction in output early this year, when GDP shrank at a 0.5 percent annualized pace in the first quarter. That decline reflected a surge in imports as companies rushed to stockpile goods ahead of higher tariffs—a factor that subtracts from gross domestic product (GDP) calculations even though it pointed to strong underlying demand and investment.
The IMF’s more optimistic outlook for the U.S. economy comes on the same day that data from the Conference Board showed Americans have grown more confident about future business conditions and incomes. The Conference Board’s consumer confidence index ticked up to 97.2 in July from 95.2 in June, reversing last month’s slide. The forward-looking expectations index jumped 4.5 points, while the present situation index slipped slightly amid concerns about job availability.
“Of course, the consumer is confident—their investments are rising almost daily, earnings are better than expected, and the tariff scare is muted,” Gina Bolvin, president of Bolvin Wealth Management Group, told The Epoch Times in an emailed statement.
By Tom Ozimek
