Structural Headwinds Limit U.S. Economy’s Growth Potential

Real GDP expanded at a 2.00% annualized rate in the first quarter of 2026, reflecting a generally solid pace of economic activity prior to the onset of the Iran conflict. The labor market has remained relatively resilient, with the unemployment rate holding steady at 4.30% in May. At the same time inflation has edged higher, rising to 4.20% in May, the highest in three years, highlighting persistent underlying price pressures despite moderating economic ...