Monthly Economic Outlook
Economic forecast: November 2026 trends and analysis
Macroeconomic insights and outlook from the U.S. Bank Economic Research Group to help guide your business strategy
November 2026
Economic outlook at a glance
Economy keeps on keeping on
Our November 2026 U.S. economic outlook continues to point to an economy with considerable underlying momentum, even as that strength has become more concentrated and costly. Domestic demand remains strong, supported by resilient consumer spending and robust AI-related business investment. At the same time, resilience is becoming less evenly distributed. Financially stronger households continue to spend, while higher price levels, weaker real purchasing-power growth, and thinner savings cushions create greater strain elsewhere. Likewise, inflation remains elevated, while persistently high long-term borrowing costs are raising financing costs across the economy.
Looking ahead, our baseline forecast continues to call for growth near its long-run potential pace, but its composition and cost have become more important. AI-related investment should remain a key driver, although its growing role also creates concentration risk. Consumer spending should benefit from low layoffs and continued income growth, but its durability will depend on household purchasing power. Meanwhile, the final stretch toward price stability is proving more complicated, with some inflation pressures less responsive to higher interest rates. We continue to expect two additional 25-basis-point Fed rate increases by early 2027, bringing the cumulative increase to 75 basis points since September. The challenge is no longer whether inflation warrants continued restraint, but how much additional tightening is appropriate when borrowing costs are already elevated and monetary policy may be less effective against the inflation that remains hot.
Key takeaways:
Growth: Real GDP growth is forecast at 2.5% Q4-over-Q4 in 2026 (2.4% annual average) and 2.0% in 2027 (2.2% annual average). Momentum remains solid, supported by resilient consumers and robust business investment, although growth is increasingly concentrated around AI-related spending.
Labor market: We expect unemployment to average 4.2% in both 2026 and 2027. Slower hiring should be offset by historically low layoffs and slower labor-force growth, keeping the labor market broadly stable and supportive of household income and spending.
Inflation: The final stretch toward price stability is proving more complicated, as energy and other supply-related pressures offset improvement in some underlying components. We expect core personal consumption expenditures (PCE) inflation to average 3.2% year-over-year in Q4 2026 before moderating to 2.5% by the end of 2027, keeping inflation above the Fed’s 2% objective for longer.
Federal Reserve: Resilient demand and persistent inflation continue to argue for additional restraint. We expect 25-basis-point rate increases in December and March, bringing the federal funds rate to 4.25%–4.50%, with risks increasingly tilted toward a longer tightening cycle.
Risks
We maintain a 25% probability of recession over the next 12 months. Persistent inflation, additional monetary tightening, and elevated borrowing costs remain key risks, while growing reliance on AI-related investment and financial-market strength leaves the economy increasingly exposed to a reversal in either.
Macroeconomics forecast at a glance
Produced by the U.S. Bank Economic Research Group, our in-depth economic forecast examines the trends and economic indicators shaping business decisions this year and into the future.
November 2026 Report
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Sources: U.S. Bank Economics, Bloomberg, Yale Budget Lab, U.S. Bank Economics calculation
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U.S. Bank Economic Research Group
Beth Ann Bovino
Chief Economist
Ana Luisa Araujo
Senior Economist
Matt Schoeppner
Senior Economist
Adam Check
Economist
Andrea Sorensen
Economist
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