US Economy Defies Recession Fears Despite Tariff Threat
US economic growth has been resilient despite an exceptional series of adverse shocks, but that doesn't mean the risk of recession has receded.
The economy has shrug off bad news, with real or inflation-adjusted GDP growing at a seasonally adjusted annual rate of 2.1% in the first quarter and 1.5% in the second quarter, both close to the Federal Reserve's estimate of long-run potential growth.
Factors contributing to the resilience include tariff exceptions and exemptions made by the Trump administration, bringing down the effective US tariff rate to 10-15%, and a rerouting of Chinese exports via Vietnam and Mexico.
The economy is also less energy-intensive than in the past due to a shift towards services, which has limited the negative impact of rising oil prices from $60 per barrel at the beginning of 2026 to above $100.