RSM lowers its 2026 growth forecast to 1.7%

The energy shock continues to weigh on U.S. middle market firms and the broader economy, leading RSM to lower its forecast for gross domestic product growth this year to 1.7% from 2.4%, writes RSM US Chief Economist Joe Brusuelas in the May issue of The Real Economy. 

The effective closure of the Strait of Hormuz has had a dramatic impact on global energy markets and U.S. middle market businesses. The result for the rest of the year will be slower growth, rising inflation and higher unemployment—or “stagflation light,” as Brusuelas writes.

Brusuelas puts the probability of a recession over the next 12 months at 30%, up from 20% before the war.

The economic damage of the war is being felt globally as well. Australia has been scrambling to make up for the reduced imports of oil and other commodities, which have inflicted significant economic damage, writes Devika Shivadekar, RSM Global economist for Australia.

Despite the broader economic strains, though, RSM US Senior Analyst Katherine Powers notes signs of strength in the biopharma sector, with deal activity and capital formation accelerating in the first quarter, driven by patent expirations and large acquisitions.

We look at these topics and more in this issue of The Real Economy.