The double-whammy that's about to hit the US economy

iStock; Tyler Le/BI If you ask most economists, market experts, and even the Federal Reserve, the story of the US economy for the rest of 2026 will be one of strong and steady growth.

But there are serious reasons to doubt this forecast of calm waters.

There's no better example of the sanguine consensus view than the Fed's latest Summary of Economic Projections, released as part of the central bank's meeting on Wednesday.

According to the FOMC's rundown, no participants saw the risks to GDP growth as tilted to the downside.

Meanwhile, after this week's interest rate hike — the first in three years — investors and analysts don't really see the Fed taking much more action.

In the face of buoyant growth predictions and strong financial conditions, the market is priced for another two rate hikes between now and March, not much else.

Again, this feels optimistic given the near-term risks that inflation could reheat in the coming months.

Despite the rhetoric, the US economy is facing a squeeze from two ends.

The first is a slowdown in consumer spending , as Americans pull back amid higher inflation , sluggish income growth, and geopolitical uncertainty .

The second is the Federal Reserve's renewed interest rate hikes , which will ultimately need to slow the economy down to tame price hikes.

Hoping for inflation to cool on its own seems more difficult to justify every month that inflation remains above the Fed's target.

There are reasons to expect consumer spending to slow and reasons to expect the Fed not to act as a shock absorber.

The net effect of this is clear: somewhat higher unemployment and somewhat tighter financial market conditions (aka lower stock prices), in order to ultimately achieve slower inflation.

Consumer likely cools In recent years, American consumers have been the crucial drivers of the economy.