According to a detailed assessment from the nonpartisan budget watchdog, the OBBBA will deliver a significant boost to economic output in the near term, with estimates showing growth rates could climb by nearly 1% in 2026, driven by increased demand and one-time incentives for labor and investment. However, the organization stresses this burst of activity is fleeting and warns projected long-term growth will stagnate as additional borrowing burdens the economy. “An economic sugar high doesn’t mean sustained growth,” the think tank pronounced.

How the OBBBA drives short-term gains

The analysis highlights several mechanisms through which the OBBBA will stimulate growth in the short run. This includes the government borrowing $600 billion per year from 2026 through 2028, reductions in taxes on work and investment, and temporary expansions of incentives for businesses. These policies are expected to create a surge in demand and temporarily increase labor and capital supply, but the CRFB underscores these one-off effects will fade quickly as the economy adjusts—and particularly so if full employment persists.

The CRFB notes OBBBA supporters have argued the law will significantly accelerate economic growth, including the White House Council of Economic Advisors and Trump himself on Truth Social. This will be true in 2026 and 2027, the CRFB says, finding near-term economic growth will indeed be boosted, but sustained economic growth will not.

CRFB cautions the positive economic effects will be offset over time by rising national debt, which is projected to grow by $4.1 trillion through 2034, crowding out investment and exerting downward pressure on long-term growth. The analysis notes the boost to growth resembles prior episodes such as the aftermath of the 2017 Tax Cuts and Jobs Act, which provided an initial lift to the economy but failed to deliver lasting growth.

Forecasts signal diminishing returns

The CRFB cited supporting estimates from the Tax Policy Center and Yale Budget Lab as largely agreeing with its own conclusions. Their models show the OBBBA increasing economic output by 0.7% to 0.9% in 2026, but growth rates quickly reverting afterward. In some models, economic output could even decline by as much as 0.2% by 2034.

The Congressional Budget Office and other think tanks also predict only modest or negative long-run impacts, despite a robust immediate stimulus. (The CRFB notes that the CBO has not issued an estimate about the final legislation, but did release a dynamic score for an earlier House version of the bill.)

The CRFB notes the Council of Economic Advisors expects a similar pattern of a near-term stimulus boost of nearly 2.4% and a 4.75% increase in GDP in 2028, falling to 2.55% by 2034. Among other estimators, the Tax Foundation on the high end estimates output increasing 1.25% in 2034, while the Penn Wharton Budget Model on the low-end estimates output would decrease by 0.2% at that point.

The CRFB repeatedly refers to the temporary “sugar high” from the OBBBA and compares it directly to another sugar high: the 2017 Tax Cuts and Jobs Act, or TCJA, from Trump’s first term. The growth that resulted from that law, it said, now appears in retrospect “to have represented a one-time boost to economic activity rather than a sustained increase in the rate of economic growth.” Roughly as expected, the economy grew by 3% in 2018, 2.6% in 2019, before appearing on course to grow at roughly 2.2% in 2020. That was of course interrupted by the pandemic, with a historic contraction, immediately followed by an equally historic expansion. On average, though, GDP has grown by about 2.3% per year since 2019, with the CRFB estimating a 2.1% growth rate if not for an unexpected surge in immigration that swelled the labor force. In other words, another sugar high. The CRFB charted this out as well:

The CRFB finishes by calling for a focus on sustainable fiscal reforms, such as thoughtful adjustments to taxes, regulations, and entitlements. Most important, it calls for a credible strategy to constrain the $37 trillion national debt, warning that without such changes, today’s economic buzz will be followed by years of stagnation. The Dow Jones industrial average posted its most recent record high on Aug. 22, 2025, while the S&P 500 has been hovering near record highs itself throughout the month. Nevertheless, markets were rattled briefly by a tech selloff amid fears of a bubble in artificial intelligence mid-month.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.