ORLANDO, Fla. — A new forecast from the University of Central Florida says the U.S. economy is being pulled in different directions as rising energy prices, slower hiring, household debt and artificial intelligence investment reshape the outlook.
The forecast comes from UCF’s Institute for Economic Forecasting, led by economist Sean Snaith.
Snaith said rising energy prices tied to the conflict with Iran are adding new pressure for households that were already recovering from years of inflation.
“The economy is being shaped by powerful crosscurrents right now,” Snaith said. “The headline numbers and the lived experience of many Americans are telling two very different stories.”
The forecast does not currently predict a recession, but Snaith said the economy is becoming more vulnerable to future shocks.
“The risk is that these ‘economic eddies’ begin feeding into something larger,” Snaith said. “A whirlpool forms when competing currents start pulling in the same direction.”
According to the forecast, the economy is facing pressure from geopolitical conflict, tariff uncertainty, slower hiring and financially strained consumers.
UCF’s forecast says real gross domestic product growth is expected to slow from 2.1% in 2025 to 1.8% in 2026 and 1.7% in 2027 before improving to 2.4% in 2028.
Payroll job growth is expected to slow to 0.1% in 2026 and contract slightly in 2027, while unemployment is expected to gradually rise to 4.9%.
The forecast also says real consumer spending growth is expected to slow to 1.8% in 2026 and 1.7% in 2027 as higher energy prices and debt burdens weigh on households.
Snaith said businesses continue to invest heavily in artificial intelligence, data centers and computing infrastructure.
At the same time, companies are becoming more cautious about hiring as they evaluate how AI could affect staffing and productivity.
“This isn’t a traditional recession story,” Snaith said. “It’s an economy going through structural change while consumers are still recovering from the last shock.”
The forecast says inflation is expected to remain above the Federal Reserve’s 2% target through much of the forecast period, complicating the outlook for interest rate cuts.
UCF’s forecast also notes that the national debt has surpassed $39 trillion, with annual interest payments exceeding $1 trillion and rising.
Snaith said the forecast stops short of predicting a recession.
“There will be another recession,” Snaith said. “We’re just not forecasting one right now.”
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