{
  "id": 8649648,
  "title": "The double-whammy that's about to hit the US economy",
  "url": "https://urgent.news/2026/09/20/the-double-whammy-thats-about-to-hit-the-us-economy",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-09-20T08:47:01.000Z",
  "source": {
    "name": "Business Insider",
    "slug": "business-insider",
    "url": "https://www.businessinsider.com/us-economy-slowdown-consumer-spending-federal-reserve-interest-rate-hikes-2026-9"
  },
  "original_language": "en",
  "account": "The United States economy is expected to experience a double whammy in the coming year, marked by a slowdown in consumer spending and renewed interest rate hikes by the Federal Reserve. Despite the consensus among economists and market experts that the economy will grow strongly and steadily, there are significant reasons to question this optimistic forecast.\n\nThe Federal Open Market Committee (FOMC) released its Summary of Economic Projections, indicating that no participants saw risks to GDP growth as being tilted to the downside. Moreover, after the recent interest rate hike, which was the first in three years, investors and analysts foresee only two additional rate hikes between now and March. However, this outlook seems overly optimistic given the near-term risks that inflation might reheat in the coming months.\n\nThe double threat to the US economy lies in two key areas: a slowdown in consumer spending and the Federal Reserve's renewed interest rate hikes. Consumer spending is expected to decelerate due to higher inflation, sluggish income growth, geopolitical uncertainty, and the fading boost from larger tax refunds. In addition, the Federal Reserve's interest rate hikes will ultimately need to cool the economy to tame price hikes, potentially leading to slightly higher unemployment and tighter financial market conditions.\n\nSeveral factors contribute to the anticipated slowdown in consumer spending. First, the boost from increased tax refunds is gradually fading away, with inflation-adjusted consumer spending growing at only a 2.0% annual pace over the first half of the year, similar to its 2025 rate. As tax policy transitions from tailwind to headwind, the contribution to GDP from fiscal relief is projected to slow to zero, then become a drag on the economy in 2027.\n\nSecond, rising geopolitical uncertainty, particularly the ongoing war in Iran, leads to higher gas and food prices, which further pressure consumers. Inflation measures show narrowing gaps between headline and core inflation, indicating that price pressures from energy products are declining. However, the rest of the year is expected to be challenging, with energy prices continuing to rise and grocery store prices accelerating due to increased diesel and agricultural commodity prices.\n\nLastly, the housing market is another significant headwind to consumer spending, as mortgage rates climb and the number of Americans moving stalls. As home sales slow, so do purchases of major household goods, which contribute above their weight to GDP in the second quarter. The slowdown in home sales implies that this positive growth may turn sour by year-end, leading to a further moderation in household consumption growth into the following year.",
  "summary": "Consumer spending is showing signs of slowing — right as the Fed starts raising interest rates. That's going to be a double drag on the US economy.",
  "key_points": [
    "US economy faces double whammy of slowing consumer spending and Fed rate hikes",
    "Consumer spending expected to decelerate due to inflation, income growth, geopolitical uncertainty"
  ],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}