Economy Slowdown Looms: Conference Board Predicts 1.6% Growth

The U.S. economy is navigating a period of considerable uncertainty, with predictions pointing towards a significant slowdown in growth. This cautious outlook has been underscored by recent data releases and statements from both the Conference Board and Federal Reserve officials. While there are indications that inflation may be easing, concerns remain about the potential impact of tariffs and their broader effects on economic activity.

Conference Board Signals Slowdown Ahead

The Conference Board, a leading independent research organization, has recently warned that the U.S. economy is heading for a substantial slowdown in 2025. Their analysis points to a decline in housing permits and two consecutive months of rising unemployment claims as key indicators of this impending deceleration. Justyna Zabinska-La Monica, senior manager for business cycle indicators at the Conference Board, stated that while a full-blown recession is not anticipated, a significant slowdown in economic growth compared to 2024 is expected, with real GDP growth projected at 1.6% for the year. Persistent tariff effects could further exacerbate this deceleration in 2026.

In contrast to the Conference Board's assessment, Federal Reserve officials have expressed a more pessimistic view of future economic growth. Their median projection released on Wednesday indicates that gross domestic product will expand by just 1.4% this year, significantly lower than the 1.7% predicted in March. This divergence in forecasts highlights the uncertainty surrounding the U.S. economy and the challenges faced by policymakers in navigating these turbulent times.

Fed Chair Jerome Powell has acknowledged that despite the economy appearing "solid," surveys of businesses and consumers reveal a decline in sentiment and heightened uncertainty about the economic outlook. These concerns are largely attributed to trade policy uncertainties, including the impact of high tariffs on prices and business investment. The Fed's preferred measure of inflation, the personal consumption expenditures price index excluding volatile food and energy prices, is projected to end the year at 3.1%, exceeding their 2% goal.

Several Federal Reserve officials, including Governor Christopher Waller, have advocated for a gradual easing of monetary policy to mitigate the potential for further economic slowdown. They argue that with recent data showing signs of inflation easing on both a monthly and annual basis, the central bank should consider reducing borrowing costs by 0.25 percentage points at their next scheduled meeting in July. This cautious approach aims to avoid any sudden shocks to the economy while providing support for continued growth.

Waller emphasizes that starting slow with policy adjustments is crucial to ensure a smooth transition and minimize unforeseen consequences. He believes that easing monetary policy would help prevent a setback in the job market, which has shown signs of weakness despite overall low unemployment rates.