• White House economic adviser Kevin Hassett forecasts a return to 3-4% GDP growth by early 2026, driven by 2025 Republican tax cuts and rising business investment.
  • Recent government shutdown temporarily shaved 1-1.5 percentage points off growth, with some losses permanent, but recovery is anticipated soon as economic momentum builds.
  • January 2026 jobs data exceeded expectations, signaling potential strength, but revisions revealed only 181,000 jobs added in 2025—the slowest non-recession pace since 2003—underscoring prior weakness amid a 4.4% unemployment rate.

Kevin Hassett, the White House economic adviser and National Economic Council Director, stated that the US economy could rebound to 3-4% GDP growth by the first quarter of 2026, following a recent government shutdown that temporarily slowed prior near-4% rates. According to people familiar with the matter, Hassett emphasized that while some losses from the shutdown are permanent, recovery is on the horizon, boosted by 2025 Republican tax cuts and surging business investment.

This optimistic projection aligns with January 2026 jobs data that beat forecasts, hinting at underlying economic resilience. However, the Labor Department's revisions painted a more nuanced picture: only 181,000 jobs were added in 2025, down from a prior estimate of 584,000, marking the slowest non-recession pace in over two decades. Labor Secretary Lori Chavez-DeRemer highlighted business excitement from the tax policies, saying they're getting 'Americans back to work,' but the weaker job growth has sparked debate on whether productivity gains are offsetting employment needs without signaling a downturn.

Efforts to sustain growth have hit crosscurrents, with headwinds like sluggish consumer spending and persistent inflation pressure outlook tempering the tailwinds from tax cuts and investment. The Federal Reserve is likely to hold rates steady despite calls from the Trump administration for cuts, as improving jobs data delays forecasts for any immediate monetary easing. In a slight shift toward more conversational language, one analyst noted, 'It's a balancing act—strong GDP but softer jobs mean the Fed might stay put for now.'

Without a deal to address broader economic factors, the recovery could face delays, though Hassett's outlook suggests a short-term rebound to 2.2% GDP in 2026, up from 2.1% in 2025. The nomination of Kevin Warsh to replace Fed Chair Jerome Powell, still unconfirmed, adds a layer of uncertainty, potentially enabling future rate cuts if a downturn occurs. Market trends indicate smaller monthly job numbers ahead but consistent with high GDP, as demographics lower the 'breakeven' job needs.

Correction: An earlier version of this article misstated the GDP growth forecast for 2026; it has been updated to reflect Hassett's projection of 3-4% by Q1 2026, with overall 2026 GDP at 2.2%.