The OECD lifts U.S. growth outlook - but it's still a bleak forecast

By Steve Goldstein

Global growth is projected to be 3.2% in 2025 and 2.9% in 2026, according to the OECD.

The Organization for Economic Cooperation and Development expects the U.S. economy to slow dramatically this year, though its new forecast is slightly more upbeat than one offered earlier in the year.

The OECD on Tuesday forecasted the U.S. economy to grow at a 1.8% clip this year, versus 1.6% in its June assessment, though that's down from 2.8% last year. The Paris-based intergovernmental organization still sees the U.S. economy slowing further to a 1.5% growth rate in 2026.

The midpoint of the Federal Reserve's projections released last week were for 1.6% GDP growth in 2025 and 1.9% growth in 2026.

The OECD made similar tenth or two-tenths upgrades to its outlook for China, the U.K. and the euro area, and lifted its Japanese growth outlook to 1.1% from 0.7%.

   OECD GDP growth forecasts (in %) 
   Country/Region                    2024 growth  2025 projections  2025 Difference from June  2026 projections  2026 Difference from June 
   World                             3.3          3.2               0.3                        2.9               0 
   G20                               3.4          3.2               0.3                        2.9               0 
   Australia                         1.1          1.8               0                          2.2               0 
   Canada                            1            1.1               0.1                        1.2               0.1 
   Euro area                         0.8          1.2               0.2                        1                 -0.2 
   Germany                           -0.5         0.3               -0.1                       1.1               -0.1 
   France                            1.1          0.6               0                          0.9               0 
   Italy                             0.7          0.6               0                          0.6               -0.1 
   Spain                             3.2          2.6               0.2                        2                 0.1 
   Japan                             0.1          1.1               0.4                        0.5               0.1 
   Korea                             2            1                 0                          2.2               0 
   Mexico                            1.4          0.8               0.4                        1.3               0.2 
   Türkiye                           3.3          3.2               0.3                        3.2               -0.1 
   United Kingdom                    1.1          1.4               0.1                        1                 0 
   United States                     2.8          1.8               0.2                        1.5               0 
   Argentina                         -1.3         4.5               -0.7                       4.3               0 
   Brazil                            3.4          2.3               0.2                        1.7               0.1 
   China                             5            4.9               0.2                        4.4               0.1 
   India                             6.5          6.7               0.4                        6.2               -0.2 
   Indonesia                         5            4.9               0.2                        4.9               0.1 
   Russia                            4.3          1                 0                          0.7               0 
   Saudi Arabia                      1.9          3.7               1.9                        3.9               1.4 
   South Africa                      0.5          1.1               -0.2                       1.3               -0.1 
   Source: OECD 

"Strong AI-related investment boosted outcomes in the United States and fiscal support in China outweighed the drag from trade headwinds and property market weakness," said the OECD, which also noted front-loading ahead of tariffs.

But the group said the full effect of tariff increases have yet to be felt and are becoming increasingly visible in spending choices, labor markets and consumer prices.

The OECD said "further increases in bilateral tariff rates, a resurgence of inflationary pressures, increased concern about fiscal risks, or substantial risk repricing in financial markets" could also lower growth even further as they said high and volatile crypto-asset valuations raise financial stability risks.

On the upside, a reduction in trade restrictions or faster adoption of AI technology could increase growth prospects.

The S&P 500 SPX on Monday notched its 28th record close of the year on hopes over AI spending paired with Fed rate cuts. The yield on the 10-year Treasury BX:TMUBMUSD10Y has dropped 44 basis points this year.

Bitcoin (BTCUSD), the main cryptocurrency, is trading below record highs but through Monday was up 20% in 2025.

-Steve Goldstein

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09-23-25 0552ET