The global economy is entering a period of slower growth, and many of the pressures driving this shift are becoming harder to ignore. Rising tariffs, ongoing supply-chain complications, and geopolitical tensions have kept production costs elevated, which in turn has sustained higher-than-expected inflation across many countries. Even though major economies avoided recession recently, underlying structural weaknesses are becoming more visible. This combination of slowing momentum and persistent price pressures has created an environment where central banks must tread carefully, balancing inflation control with the risk of tightening financial conditions too much.
In the United States, the situation reflects this broader uncertainty. The recent government shutdown delivered a noticeable hit to output, and while consumer spending has stayed resilient, business investment is starting to cool as firms wait for clearer direction on interest rates and fiscal policy. The Federal Reserve is expected to begin lowering rates to support borrowing and investment, but this comes with its own risks if inflation hasn’t fully stabilized. As a result, the U.S. economy now sits at a crossroads, still expanding, but increasingly vulnerable. How policymakers respond in the coming months will determine whether 2026 brings renewed growth or a more pronounced economic slowdown.
Source:
https://www.oecd.org/en/publications/oecd-economic-outlook-interim-report-september-2025_67b10c01-en.html?
This post highlights how fragile the economy is heading into 2026. With slower growth and persistent inflation, government policies are going to be more important than ever. But implementing government policies seems tricky because cutting rates could stimulate the economy and increase business investment but it could also cause higher inflation so there's a trade-off. It'll be interesting to see what combination of policies and their timing would help stabilize the economy.
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