The Federal Reserve’s March 2026 economic projections show a slightly more optimistic view of economic growth in the United States (US) than what was expected in December. GDP growth for 2026 has been revised up to 2.4% from 2.3%, while the 2027 forecast has been revised up to 2.3% from 2.0%. Growth is then expected to settle at 2.1% in 2028. 

Overall, policymakers now see the economy as more resilient than they did a few months ago.

The labour market outlook remains steady.

The unemployment rate outlook for 2026 is unchanged at 4.4%. For 2027, it has been edged slightly higher to 4.3% from 4.2% but it is expected to return to 4.2% in 2028.

The inflation front, however, remains more of a concern.

Both headline and core Personal Consumer Expenditures (PCE) inflation for 2026 have been revised up to 2.7%, from earlier estimates of 2.4% and 2.5%.  However, for 2027, both measures are now projected at 2.2%, with inflation set to return to the 2.0% target in 2028.

When assessing the risks posed by the recent spike in oil prices, Federal Reserve Chair Jerome Powell stated that “the implications of developments in the Middle East for the US economy are uncertain”. He further noted that “in the near term, higher energy prices will push up overall inflation, but it is too soon to know the scope and duration of the potential effects on the economy”.

See The Common Sense Special Report, produced in conjunction with Frans Cronje Private Clients, on six scenarios for how the war in Iran will conclude and the implications for global oil prices.

On interest rates, the Fed still expects a gradual easing path.

The policy rate is projected at 3.4% in 2026, suggesting one 25 basis point cut from current levels. It is then expected to fall to 3.1% in 2027.

Bheki Mahlobo told The Common Sense that, “at odds with many 2025 predictions that the US economy would falter, the data suggests solid growth and a stable jobs market which bodes well for the American outlook into 2028”.