The note expects annualised United States (US) second quarter GDP growth of 2.3%, up from 2.1% in the first quarter – when the latest data are released this Thursday. It says the expansion will likely be supported by resilient household spending, steady manufacturing output, and continued investment in artificial intelligence (AI) equipment and software, despite higher energy prices linked to the conflict with Iran.

The firm expects growth to remain firm through the rest of the year, reaching near 2.2% in the third quarter as consumer spending receives a boost from the FIFA World Cup, before easing to around 2.0% in the fourth quarter as that effect fades.

The firm expects overall US economic growth of around 2.2% in 2026.

Looking further ahead, the firm expects 2026 to represent a near-term peak in US growth. It projects that annual growth will subsequently settle into a range of roughly 1.8% to 2.0% through 2030, barring a major global crisis.

That forecast assumes that stricter immigration enforcement will weigh on productivity, although this will be partly offset by gains from AI. It also expects the economic boost from federal spending and stimulus to fade, while oil prices decline towards about $70 and consumer spending becomes more closely aligned with wage growth. That would mean less reliance on credit cards and government support to sustain household consumption, placing some downward pressure on future growth.

The note says that the American economy has emerged as the central greatest concern for voters ahead of the November midterm elections. The note points to recent Pew Research polling showing that the share of Republicans who rate economic conditions as good or excellent has fallen to 41.0%, from 49.0% in January. That same research shows that Americans are now almost evenly divided over which party they agree with on economic policy, with 37.0% choosing the Democratic Party and 36.0% choosing the Republican Party.

Five sets of predictions consulted by the firm all forecast that Democrats will regain control of the House of Representatives, while Republicans will retain the Senate.

Polymarket currently assigns an 86.0% probability to Democrats winning the House and a 56.0% probability to Republicans retaining the Senate.

The firm argues that the political outlook, and its interface with the economy, will be the central determinant of the Trump administration's approach to Iran. A core block of Republicans favour ending the conflict quickly and shifting attention back to prices, affordability, and economic growth. However, the firm warns that if the White House concludes that the outcome of the midterms is already largely settled, it may believe there is little political cost to extending the campaign against Iran.

The firm places a 65.0% probability on the current flare-up and related fallout concluding by Labor Day (in the first week of September) and oil prices returning to roughly $70 during the second half of the year. It assigns a 35.0% probability to the US becoming drawn into a longer conflict that keeps oil prices above $100 deep into 2026 or beyond.