Outlook for the US Economy – 3rd Quarter 2026
By M. Ray Perryman, PhD, CEO and President
The Perryman Group
Employment – Growth in the United States economy continues to be generally sluggish, with a gain of 509,000 net new jobs over the 12-month period ending September 2026 yielding a growth rate of only 0.32%. Over the past year, the educational services, health care, and social assistance industries featured both the largest gains in workers (505,000) and the fastest growth in percentage terms (1.84%). Other sectors shed jobs, however, with the largest losses in the government segment, down -213,000 workers from September 2025 to September 2026. The nation’s seasonally adjusted unemployment rate in September was 4.18%, down 0.15 percentage points from a year prior.
The job market continues to see notable shifts with the deployment of AI. Although many jobs have exposure to AI, it appears that scenarios of very high job losses in the near term are likely overstated. Instead, broader deployment of AI is a source of productivity gains across many occupations, and ongoing investments in related infrastructure are contributing to growth. Clearly, there will be dislocations, however, with opportunities in some fields shrinking over time while expanding in others. As productivity gains are realized, more rapid economic growth can occur.
Inflation and Interest Rates – The conflict in the Middle East continues to be disruptive. Oil prices remain elevated, with periodic surges and retreats based on evolving conditions. The Strait of Hormuz continues to be contested, and Iran and its proxies have damaged pipelines and other infrastructure in Saudi Arabia, Qatar, and other countries.
While there are clear signs that US actions such as the ongoing blockade are putting significant pressure on the regime, thus far no meaningful framework for peace has been reached. In fact, recent events are raising fears of escalation rather than resolution. As a result, oil prices are likely to trend higher than they had been prior to the conflict, leading to upward pressure on costs across the economy. Diesel prices have soared in recent months due to higher crude oil prices and short global supplies, with the added expense working its way through the supply chain.
The Federal Reserve raised target interest rates at the most recent meeting and further increases this year have been signaled. Until inflation is notably reduced (which is difficult in the face of the ongoing conflict, tariffs, and worker shortages in key sectors), data on prices will be a central focus.
Economy – Ongoing consumer spending has been a notable contributor to business activity. However, many households are struggling with higher prices for necessities, and inflation is causing increasing pessimism regarding not only personal finances, but also the economy more broadly. It is thus not surprising that recent consumer sentiment indices measures have fallen. At the same time, affluent families are benefitting from surges in the stock market and other investment values, propping up spending for certain items.
The Perryman Group’s most recent projections indicate real gross product is expected to expand by +2.12% through 2026 on a year-over-year basis, with +2.58% growth in 2027. Job gains are projected to be 0.5 million through 2026, with an increase of 2.2 million jobs next year.
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.