At the end of 2028, the level of US real gross domestic product (GDP) is projected by the non-partisan Congressional Budget Office (CBO) to be about 0.1 per cent higher than it was in CBO’s January 2025 projections because of the economic effects of the reconciliation act, higher tariffs and lower net immigration, according to the ‘CBO’s Current View of the Economy From 2025 to 2028’ published this month.

Real GDP is the nation’s economic output adjusted to remove the effects of changes in prices.

In the near term, the net effects of the 2025 reconciliation act, higher tariffs and lower net immigration on aggregate demand and the labour supply drive most of the changes in the agency’s forecast. The reconciliation act reduced taxes for the vast majority of US households.

US growth in 2026 would be 0.4 pp higher than in the last projections by the non-partisan CBO, reflecting the 2025 reconciliation act’s boost to consumption, private investment and federal purchases and the reducing impact of uncertainty about US trade policy.
In 2027 and 2028, the effects of reduced net immigration and the waning of the reconciliation act’s near-term boost to demand would drag growth.

In 2025, the growth of real GDP is projected to be 0.5 percentage points lower in CBO’s current projections than it was in the agency’s January 2025 projections, primarily because the negative effects on output stemming from new tariffs and lower net immigration more than offset the positive effects of provisions of the reconciliation act this year.

In 2026, the reconciliation act’s effects boosting growth dominate the effects slowing it that stem from the reduction in net immigration. Waning of the elevated uncertainty about trade policy provides modest support to economic growth next year as supply chains begin to adjust to the higher tariffs.

Growth next year would be 0.4 percentage points higher than in the previous projections, reflecting the reconciliation act’s boost to consumption, private investment and federal purchases and the diminishing effects of uncertainty about US trade policy.

In 2027 and 2028, the effects of reduced net immigration on the labour force and the waning of the reconciliation act’s near-term boost to demand would act as a drag on growth.

Partially offsetting those effects, an increase in domestic production, driven by higher tariffs, provides a boost to economic growth. As a result, real GDP growth in those years is roughly the same as it was in CBO’s January 2025 projections.

In addition to boosting aggregate demand in the near term, the reconciliation act will, in CBO’s assessment, raise real potential output by increasing the supply of labour, the capital stock and the and total factor productivity (TFP), the average real output per combined unit of labour and capital, excluding the effects of cyclical changes in the economy.

Meanwhile, the CBO estimated that President Donald Trump’s tariffs would shrink the US economy and add to inflation while reducing the federal deficit by $2.8 trillion.

In a published letter to Senate Democrats, the CBO estimated the budgetary and economic effects of tariff increases that were implemented through executive actions between January 6 and May 13.

The analysis found that shrinking of the US economy would vary but said that tariffs would reduce GDP growth by 0.06 per cent each year, adding that real GDP will be 0.6 per cent lower in a decade than CBO’s earlier forecasts.

“In CBO’s assessment, the changes in tariffs will reduce the size of the US economy—in part because of tariffs imposed by other countries in response to the increases in US tariffs. After accounting for that change in the size of the economy, CBO estimates that the changes in tariffs will reduce total federal deficits by $2.8 trillion,” the letter said.

“Reductions in investment and productivity stemming from higher tariffs will be partially offset by increases in resources available for private investment resulting from the reduction in federal borrowing. CBO estimates that, on net, real (inflation-adjusted) economic output in the United States will fall as a result,” it added.

Fibre2Fashion News Desk (DS)

Pre-pandemic, the giant Bluewater mall in Kent was dominated by Arcadia-owned brands. But in recent years it’s been turning into a home from home for the Inditex portfolio and owner Landsec has just announced that Stradivarius will be joining the line-up next year.

The post-pandemic period was a tough one for fashion sales at Bluewater as a number of brands — particularly those Arcadia labels — exited the mall. But its premium reputation despite it no longer being the UK’s largest mall still made it a key destination. And fashion sales there rose as much as 15.7% year on year in the April to June quarter “with shoppers showing strong demand for brands that not only offer trend-led apparel but great experiences for guests”.  

Originally a family-owned fashion brand, womenswear specialist Stradivarius joined Inditex in 1999 and it will join Bluewater with its RTW, footwear, and accessories offer, occupying an 8,488 sq ft unit on Lower Thames Walk.  

Its opening there will mean that five of Inditex’s brands will have space at the mall, with Pull & Bear and Bershka joining Zara and Massimo Dutti in 2024 “demonstrating the attractiveness of Bluewater to global fashion retail brands”.  

At present, Stradivarius has 10 stores in the UK, including in Landsec’s St David’s centre in Cardiff.  

Pablo Sueiras, head of Retail Leasing at Landsec said: “Experience-led retail is thriving, and this new opening perfectly reflects the growing demand for retail destinations that blend the right mix of the best brands and experiences. Where Stradivarius excels is at delivering versatile, trend-driven collections at a very accessible price point.

“Welcoming the fifth Inditex brand to Bluewater reinforces the centre’s position as the ideal destination for global fashion brands. We are confident Stradivarius will experience the impressive footfall enjoyed by the other Inditex brands at Bluewater.”