The International Monetary Fund warned that the global economy is showing signs of strains from sweeping U.S. tariffs and protectionism — even though it so far has held up better than expected.

The global economy is expected to grow by 3.2% this year, up from 3% predicted in July, the Washington-based lender said in its latest World Economic Outlook on Tuesday. In 2026, growth is seen edging down to 3.1%.

The upgraded forecast for this year is largely due to factors that provided temporary relief — a burst in activity as companies and households rushed to get goods in anticipation of high tariffs and a weaker dollar that bolstered global trade, the IMF said. Looking ahead, the outlook points to “dim prospects” both in the short and the long term, according to the report.

“It’s not as bad as we feared but it’s worse than we anticipated a year ago and worse than we need,” IMF Chief Economist Pierre-Olivier Gourinchas said in a briefing with reporters. “We still see the risks tilted to the downside.”

After a relative lull in recent months, tensions are riding high again, with US President Donald Trump saying last week he would hit China with an additional 100% tariff starting Nov. 1 — a response to Beijing’s recently added curbs on rare earth exports. Both sides have since indicated that talks are still possible to avert any escalation.

In the U.S., economic growth will slow to 2% this year, marking a significant decline from 2024, and remain steady at 2.1% in 2026, according to the IMF. Growth in the euro zone is seen picking up to 1.2% this year and 1.1% next. China’s expansion is forecast to downshift to 4.8% in 2025 and 4.2% in 2026.

California GDP slips to fifth worldwide

California slipped one notch in the bragging-rights totem pole to rank as the world’s fifth-largest economy in the latest update on global business output.

The Golden State economy was generating goods and services at a nationwide leading annual rate of $4.215 trillion in the second quarter — up 5% in a year, according to the Bureau of Economic Analysis.

But the latest IMF estimate for 2025 business output shows Japan’s economy at $4.28 trillion, up 6.5% in a year. So Japan reclaimed the world’s No. 4 spot, surpassing the Golden State.

EV sales tip average car price above $50K

The average price of a new car in America topped $50,000 for the first time last month, driven by a surge in sales of expensive electric vehicles and luxury models.

U.S. car buyers paid an average of $50,080 for a new car in September, up 3.6% from a year ago, according to research released Monday by the Kelley Blue Book car buying guide.

Record EV sales, driven by the expiration of a $7,500 federal tax credit, propelled prices into uncharted territory, further exacerbating an automotive affordability crisis.

“The $20,000-vehicle is now mostly extinct, and many price-conscious buyers are sidelined or cruising in the used-vehicle market,” Erin Keating, executive analyst with KBB-parent Cox Automotive, said in a statement. “Today’s auto market is being driven by wealthier households.”

Shutdown delays inflation figures

The government shutdown is delaying another major economic report, leaving policymakers at the Federal Reserve with a cloudier picture even as the economy enters a challenging phase of stubbornly persistent inflation and a sharp slowdown in hiring.

The Labor Department’s monthly inflation data was scheduled for release Wednesday but late last week was postponed until Oct. 24.

The department is recalling some employees to assemble the data, which was collected before the shutdown began.

The figures are needed for the government to calculate the annual cost of living adjustment for tens of millions of recipients of benefit programs such as Social Security.

The shutdown could make things worse for agencies like the Fed if it continues, because government agencies cannot collect the raw data that are then compiled into the monthly reports on jobs, inflation, and other economic trends.

Compiled from Bloomberg, staff and Associated Press reports.