Fitch sees US slowdown in 'hard data' and not just surveys, but uncertainty over Trump tariffs have eased

The rating agency added that it has seen a 'reduction in uncertainty' owing to US tariffs, but the global growth will see a 'sizeable slowdown' compared to 2.9% seen last year.

Fitch Ratings is seeing evidence of a US slowdown in 'hard data', not just in surveys, even as it revised global growth forecast for 2025 moderately higher to 2.4 percent on reducing uncertainty over Trump's tariffs.

In a note issued on September 10, the rating agency cited better-than-expected 'incoming data' for the June quarter behind the growth revision, however, it still sees the annual world growth to be sharply lower than last year. The rating agency added that it has seen a 'reduction in uncertainty' owing to US tariffs, but the global growth will see a 'sizeable slowdown' compared to 2.9% seen last year.

"Greater clarity about US tariff hikes does not alter the fact that they are huge and will reduce global growth. And evidence of a slowdown in the US is now appearing in the hard data; it’s no longer just in the sentiment surveys,” Brian Coulton, Chief Economist at Fitch said, underscoring that 'hard data' is now confirming a US slowdown.

The note cited evidence of an underlying US slowdown in 'hard economic data', but China’s export growth has managed to hold up well in the face of the shock of Trump tariffs, and even Eurozone growth has seen positive surprises, Fitch added. While China’s export to US has slowed down, its exports to other markets have ensured a trade surplus for the world's second-largest economy. The elevated tariffs are potentially denting global trade and corporate profits, Fitch said, despite a modest impact on inflation so far.

"Higher inflation will dampen real wage growth and weigh on US consumer spending, which has already slowed notably in 2025," Fitch added, referring to a deceleration in US job growth. "Job growth has also decelerated markedly, partly reflecting the impact of the immigration squeeze on labour force growth," said Fitch. The US labour force is short more than a million workers following Trump's campaign to drive illegal immigrants from America, according to latest data.

The rating agency said it sees US growth below the recent trend. "A widening fiscal deficit should support demand in 2026, but Fitch expects the US annual average GDP growth rate to remain well below trend at 1.6% next year." American companies had rushed to import goods ahead of President Trump's tariffs on global trading partners, which widened the US trade deficit in July to a four-month high.