US Economic Outlook: July 2025

The U.S. manufacturing recovery is stalling—but not for everyone. In this month’s 10-minute outlook, Board Principal Economist Natalie Gallagher explains the evolving dynamics across the sector, and what they signal for the broader economy through 2026.

If you’re connected to U.S. manufacturing—either directly or downstream—this strategic context is worth 10 minutes of your time.

This month’s update covers:   

• A fragmented growth picture, with output up just 0.8% YTD and contraction signals from the PMI
• Why even essentials like food & beverage are slipping—while chemicals and electronics climb
• The role of policy: tax incentives, capital expensing, and reshoring vs. the drag of tariffs and labor shortages
• A look ahead at 2026, where flat demand, tight Fed policy, and structural constraints suggest slow growth ahead