US Economy Set to Grow 2.4 Percent in 2026: AM Best

The US economy entered 2026 on relatively solid footing, continuing to outpace most advanced economies in 2025, according to a new AM Best report. The performance is expected to persist this year despite mounting headwinds. 

In its Best's Special Report, "US Economy Grows Despite Emerging Headwinds," AM Best cited International Monetary Fund projections showing real gross domestic product growth rising to 2.4 percent in 2026, up from 2.1 percent in 2025. By contrast, growth across advanced economies is projected to edge up only slightly, from 1.7 percent to 1.8 percent, reinforcing the comparatively stronger US outlook. 

"Growth dynamics in 2025 were uneven, in part impacted by trade tensions earlier in the year and the government shutdown towards the end of the year," Ann Modica, director, AM Best, said. "Additional headwinds included the tightening of trade conditions, elevated levels of fiscal and policy uncertainty, and slower population and labor force growth." 

Even with those pressures, AM Best said the near-term risk of a US recession remains limited. Personal consumption continues to anchor economic activity, accounting for nearly 70 percent of gross domestic product. Household spending has been supported by fiscal stimulus in recent years, moderating inflation, positive real wage growth, elevated household net worth tied to equity and housing markets, and stable labor market conditions. 

The report also points to signs of cooling in the labor market. Throughout 2025, employment growth slowed as part of a gradual rebalancing from the tight conditions that followed the pandemic. Average monthly nonfarm payroll gains declined sharply, from about 380,000 in 2022 to 49,000 in 2025. AM Best attributed the slowdown to weaker labor demand, increased employer caution, and a broad-based moderation in hiring. 

"While this deceleration is consistent with a maturing economic expansion and easing labor market tightness, it also points to a reduced capacity for continued employment gains to support income growth and consumer spending going forward," Ms. Modica said. 

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