Barclays strategists have overhauled their U.S. economic outlook following the weekend’s U.S.–China tariff de-escalation, now expecting no recession in 2025, softer inflation, and just one Fed rate cut this year.
Trade Deal Eases Inflationary Pressures
In a Tuesday client note, Barclays highlighted that reciprocal tariffs will fall from 155% to about 40% on Chinese goods and by similar magnitudes on U.S. exports—levels they expect to hold “throughout the medium term.”

“We expect a less significant jump in inflation and no recession,” the bank wrote, citing the relief to input costs and global supply chains.

Revised Fed & Inflation Forecasts

Fed rate cuts: Now forecasting one 25 bp cut in December 2025 (down from two cuts previously).

Core PCE inflation: 2025 forecast lowered to 3.3% from 3.8%.

GDP growth: Raised to 0.5% in 2025 (no longer penciling in a mild H2 downturn) and 1.5% in 2026 (Q4/Q4).

Unemployment: Peak rate of 4.3%, with payrolls slowing but avoiding outright job losses.

Looking further ahead, Barclays expects three additional 25 bp cuts in 2026—in March, June, and September—bringing the funds rate to 3.25%–3.50% by year’s end.
What Investors Should Watch Next
Key macro releases will test Barclays’ upgraded forecasts:

Personal Consumption Expenditures (PCE) inflation

GDP revisions

Labor market reports

You can track the timing and consensus estimates for these critical data points via the Economics Calendar API, ensuring you stay aligned with the Fed’s evolving outlook.