Outlook for the US Economy – 2nd Quarter 2026
By M. Ray Perryman, PhD, CEO and President
The Perryman Group
Employment – Growth in the United States economy has slowed significantly, gaining 531,000 net new jobs over the twelve-month period ending June 2026, an annual employment growth rate of only 0.33%. Over the past year, the educational services, health care, and social assistance industries featured both the largest gains in workers (655,000) and the fastest growth in percentage terms (2.42%). Some industries did shed jobs, however, with the largest losses in the government industries, down -215,000 workers from June 2025 to June 2026. The seasonally adjusted unemployment rate in June was 4.19%.
Underlying demographic trends and immigration policy are contributing to constraints on labor supply. There are shortages in many occupations, including skilled trades, mechanics, and hands-on health care workers. While AI may temporarily reduce demand in some sectors, it will not eliminate the deficiencies in many areas (and certainly not on a permanent basis). Over the next few years, workforce pressures may intensify.
Economy – The fact that the US economy generally continues to see modest growth even when confronted with significant challenges demonstrates notable stability. Major capital deployment for data centers and other necessary infrastructure for AI is a major reason for this resilience. Businesses are investing heavily in automation, data support, and AI-driven processes. From construction to consulting, deploying AI is generating substantial business activity. Simultaneously, numerous companies have announced layoffs, and there will continue to be dislocations as firms adjust. Overall effects will likely be positive and could bring a substantial increase in potential economic growth through productivity enhancements.
In normal times, consumer spending accounts for about 70% of economic activity, and household financial health is an important factor in overall expansion. While aggregate consumption has remained relatively strong, it has been largely driven by higher-income households, which have been benefiting from a rising stock market and higher home prices. In contrast, lower-income households have been more affected by inflation and overall consumer sentiment indicators are at or near record lows. If spending drops significantly, the pace of expansion will be materially diminished.
Inflation – The ongoing conflict in the Middle East is causing increased uncertainty and energy market volatility. Although as a major producer the United States is somewhat insulated from the worst of the supply and price shocks, the effects on the global economy are slowing US economic expansion. On again-off again negotiations for peace complicate the decision process, slowing investment and hiring.
Inflation continues to affect Federal Reserve decisions regarding potential interest rate movements. In addition to the ongoing energy shocks, the world is becoming more fragmented, which contributes to higher prices (as does tariff policy). The recent wholesale price index spike has raised particular concerns.
Current projections are provided in the tables below.
About Dr. M. Ray Perryman and the Perryman Group
Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.