Barclays expects U.S. economic growth to average around 2% quarter-on-quarter between the third quarter of 2025 and the third quarter of 2026, reflecting a steady but moderating expansion as fiscal stimulus fades and trade headwinds persist.

The bank said recently imposed tariffs will act as a “slow burn” on activity, with most firms expected to pass on higher import costs gradually rather than in an immediate price surge. That could cushion near-term inflation readings but prolong pressure on corporate margins.

Barclays also warned that the main downside risks to its outlook stem from softer consumer spending and a potential uptick in unemployment, which could weigh on confidence and discretionary demand heading into 2026.

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Barclays’ tempered 2% growth forecast supports expectations of a soft landing and steady Fed policy in 2026. The bank’s warning on consumer fatigue and unemployment could dampen equity optimism if labour data weakens further.