Economic activity both in the U.S. and around the world is likely to slow considerably into the end of this year and the beginning of 2026, according to JPMorgan Chase. In a forecast released Monday, the firm’s economists see U.S. gross domestic product continuing along at a solid 2.5% annualized rate in the third quarter, but then declining to about half that for the following two periods. Specifically, the firm says GDP likely will increase at just a 1.2% pace for the fourth quarter of 2025 and Q1 of 2026, owing to a deceleration in the labor market and consumer spending. “Employment gains slowed to a stall in August and hours worked are contracting on the quarter, developments that are unusual for an economy poised to generate above-potential growth,” economist Nora Szentivanyi said in a client note. Szentivanyi said this week’s key economic release will shed more light on potential growth. On Friday, the Commerce Department will release its August reading on personal income and spending, as well as the personal consumption expenditures price indexes that the Federal Reserve uses at is principal inflation gauge. JPMorgan expects consumer spending to show just a 0.1% monthly increase while income gains are predicted to slow to 0.3%, the latter of which will “highlight the building pressure on real purchasing power.” While the income figure is in line with the Dow Jones consensus, the spending outlook is considerably below the Wall Street forecast for a 0.5% rise. Consumer spending accounts for more than two-thirds of all economic activity in the U.S., so a substantial slowdown there would reverberate into the broader GDP calculation. The JPMorgan view also is somewhat at odds with the Atlanta Fed’s GDPNow tracker, which sees growth at 3.3% in Q3. Officials participating in the Federal Open Market Committee meetin g last week updated their outlooks, penciling in a 1.6% full-year GDP growth outlook, 0.2 percentage point higher than the previous update in June. At the global level, the firm expects GDP growth to “downshift” to 2% in Q3 then decelerate further to 1.5%. The International Monetary Fund, in its July update , forecast advanced economies to grow at a 1.5% pace in 2025, with the U.S. faster at 1.9%. ( Learn the best 2026 strategies from inside the NYSE with Josh Brown and others at CNBC PRO Live. Tickets and info here . )
