Recent economic forecasts from Comerica, EY, Deloitte, and other leading institutions indicate the U.S. economy is shifting into a period of measured deceleration. After a dynamic start to the year, characterized by robust hiring and preemptive business spending, the latest indicators suggest a cooling effect—driven largely by tighter monetary policy, waning consumer momentum, and shifting global trade dynamics.
Comerica’s July outlook highlights the continued impact of elevated mortgage rates on housing affordability. The national average 30-year fixed mortgage remains near 7.2%, the highest level since 2001, according to Freddie Mac. This persistent pressure is slowing home purchases and reducing demand across urban and suburban markets. The easing in shelter-related inflation, combined with falling energy prices and greater rental availability, has led Comerica to revise its inflation forecast downward for the remainder of 2025. Economists at the bank expect year-over-year CPI growth to dip below 3% by Q4, assuming no new price shocks.
Alongside this trend, EY’s June economic outlook signals a broad-based slowdown in consumer and business activity. Much of the surge in spending earlier in the year was attributed to preemptive purchases ahead of anticipated trade restrictions and geopolitical tensions. EY projects real consumer spending growth to slow markedly—from 2.3% in 2024 to just 1.2% in 2025. Business investment is also expected to level off, with manufacturers and retailers adjusting to slower inventory turnover and moderating export demand.
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In the monetary policy sphere, analysts remain focused on Federal Reserve actions. Both EY and Deloitte suggest that the Fed will hold interest rates steady through the third quarter, with potential rate reductions on the table for late 2025—contingent on sustained inflation progress and labor market resilience. Deloitte, in particular, sees room for a gradual easing cycle through 2026, especially if geopolitical tensions and tariff uncertainties abate. However, they caution that wage growth, particularly in the service sector, remains a potential upside risk to inflation.
Despite signs of deceleration, the labor market continues to serve as a pillar of economic stability. The June jobs report showed the addition of 187,000 jobs, a slight dip from earlier in the year but still above pre-pandemic norms. Unemployment edged down to 3.7%, reflecting strong participation rates and solid hiring in healthcare, construction, and education. These gains have helped sustain household spending, even as credit card balances and auto loan delinquencies inch upward.
Meanwhile, financial markets are increasingly pricing in a cautious Fed. The federal funds rate remains between 4.25% and 4.50%, and futures markets suggest a 60% probability of at least one rate cut by December. However, policymakers remain divided. Recent comments from Fed Chair Jerome Powell reiterated that while inflation is “moving in the right direction,” risks from energy prices, trade policy, and global supply chains warrant a careful approach. Bank of America analysts have echoed this sentiment, predicting that unless job growth slows significantly, the Fed may delay rate cuts until Q4 or early 2026.
The broader takeaway from this mix of data is that the U.S. economy is stabilizing after a period of volatility. While inflationary pressures are subsiding and demand is rebalancing, the road ahead remains dependent on policy coordination, geopolitical developments, and consumer confidence. The coming months will test the resilience of this soft landing scenario, as global trade policies, interest rate shifts, and labor dynamics continue to shape the trajectory of the world’s largest economy.
