On U.S. economic growth cooling back to potential levels:

📉 TD Securities’ View: Growth Moderating Toward Potential

According to a TD Securities forecast as reported by FXStreet:

U.S. GDP growth is slowing — They expect annualized quarterly GDP growth of about 2.3% in Q4 2025, down from stronger recent quarters. This reflects weaker consumer spending, reduced federal spending, and headwinds from net exports.

Over the coming year into 2026, they project output growth to gradually “come down to potential”, meaning the pace of expansion aligns more closely with the economy’s longer-term sustainable trend rather than overheating or falling into contraction.

This moderation isn’t seen as a recession yet. TD Securities still assigns about a 25% chance of a recession over the next year, implying a base-case “soft landing” where growth decelerates rather than contracts sharply.

📌 What “Cooling to Potential” Means

In macroeconomics, “potential growth” refers to the rate at which the economy can expand without creating inflationary pressures — often estimated at around ~2% for the U.S. over time. Growth above that can fuel inflation; growth below can signal slack or weakening demand.

So TD Securities is saying:

The U.S. economy is slowing from post-pandemic strength.

Growth is returning to a more normal, sustainable pace.

This trend helps reduce inflationary pressures without necessarily triggering a recession — a classic “soft landing” scenario.

🧭 Key Drivers Behind the Slowdown

According to the report:

Consumer spending is easing, after previously robust consumption.

Federal government outlays have contracted, reducing fiscal support.

Net exports are a drag, likely due to trade dynamics.

Some investment (like in AI-related tech) still supports parts of the economy.

📊 Broader Context

Here’s a clear, sourced summary of the TD Securities analysis on U.S. economic growth cooling back to potential levels:

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