Economic and financial risk insights: Growth: improving momentum across regions

We revise up our US GDP growth forecasts for 2025 and 2026 by 30bps and 20bps, respectively, to 2.0% for each. Despite renewed trade tensions with China, robust US consumer spending through the summer points to still strong underlying momentum, aided by surging business investment. While layoff rates remain low, however, hiring rates also remain muted. posing downside risks to consumer resilience (see Figure 1).

Figure 1: US hiring and layoff rates

A prolonged US government shutdown only heightens near-term headwinds. We see euro area growth marginally stronger, with reduced uncertainty around policy helping  restore business sentiment. We upgrade our outlook for growth in China modestly, given a more proactive fiscal stance.