The Federal Reserve recently revealed that its staff forecasts for real GDP growth in 2025 and 2026 have been revised downwards, according to Odaily. This adjustment is attributed to the impact of announced trade policies, which are predicted to have a more significant effect on actual economic activity than previously anticipated. These policies also anticipate slowing productivity growth, ultimately reducing potential GDP expansion over the coming years. The demand slowdown is expected to begin sooner and be much stronger than any supply response, leading to a substantial widening of the output gap in the forecast period. The labor market is projected to weaken considerably, with the unemployment rate exceeding staff estimates of the natural rate by year-end and staying above it until 2027.