Kiplinger GDP Outlook: 2027 Growth to Be Slightly Worse Than 2026
Consumers and businesses have juiced economic growth this year, but some falloff is likely.
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GDP growth surged 3.4% at an annual rate in the third quarter, evidence of continued strong spending by consumers, who raised their consumption by 3.8% for the second quarter in a row. Business spending on information processing jumped 37.3%, but most of the impact on GDP was negated by a 144% surge in imports of computer equipment. However, there was a positive business contribution from spending on industrial equipment, data center construction, and a pickup in oil & gas drilling. Businesses adding to inventories contributed 1.6 percentage points to the growth rate. Federal government expenditures showed the strongest increase in two years, with about half of the rise related to the Iran war.
GDP growth would have been even stronger except for the biggest jump in imports in six quarters (+19.7%), the biggest decline in exports since the pandemic (-5.7%), and a small decline in housing construction.
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2027 should see moderate GDP growth of around 2%. The 2% growth level should become roughly the norm from now on, since it represents the sum of productivity gains and labor force growth, which determine long-run economic growth potential. The main threats to the economy at the moment are high gasoline costs, which could eat further into consumers’ pocketbooks, and high diesel prices, which add to the cost of shipping by truck and rail, and thus could raise prices for other goods. The Federal Reserve raised interest rates in September and will likely do so again in December, in order to control inflation by slowing the economy a bit. Finally, much of the heavy business spending on computer equipment and semiconductors will continue going to imports, which doesn’t help U.S. economic growth.
The Trump administration is continuing to impose new tariffs, but these will have little net effect on GDP growth going forward, since they mostly replace previous tariffs that expired or were invalidated by the Supreme Court. Importers are starting to receive refunds of tariffs paid under the invalidated tariff regime.
Source: Department of Commerce: GDP Data
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