At the 2025 Foundry Leadership Summit, Augustine (Gus) Faucher, chief economist for The PNC Financial Services Group, delivered a cautious assessment of the U.S. economy—one that underscores both opportunity and uncertainty for the metalcasting industry. Faucher highlighted how global trade policy, inflation, and tight labor markets are reshaping U.S. manufacturing and investment.

“The U.S. economy remains fundamentally strong,” said Faucher, “but we’re entering a period of slower growth, with significant risks weighted to the downside.”

For foundries, whose business outcomes are tied to industrial output, capital investment, and global metals trade, Faucher’s presentation offers a better under­standing of the economic forces at work.

U.S. Outperforming Other Nations

Faucher opened by noting high optimism among U.S. small business owners, based on a recent PNC survey. He also highlighted how economic growth in the U.S. has outpaced other developed nations post-pandemic. 

“The U.S. is the star of the G7,” he said, pointing to a 12% increase in real GDP since late 2019, compared to far slower growth in Europe and Japan. Massive fiscal stimulus and aggressive monetary easing helped drive the rebound, while consumer spending has remained resilient.

The Impact of Tariffs on the Economy

Tariffs pose an immediate threat to industrial producers. Since the beginning of 2025, average tariff rates have increased nearly seven-fold, climbing from roughly 2% to nearly 15%. 

“Tariffs act as a tax increase,” Faucher explained. “They raise prices for consumers and for businesses that rely on imported inputs.” For foundries importing aluminum, specialty steels, or machine tools, that “tax” directly raises production costs.

“U.S. leverage over China is weaker than it used to be,” Faucher said. “Chinese exports to the U.S. as a share of their GDP have fallen from 7% to around 3%.” As a result, he added, “China isn’t in a rush to make a deal.”

While a temporary agreement with China on certain tariffs has been reached since Faucher spoke to AFS members, global supply chain pressures are expected to rise again in 2026, especially for metals and machinery.

Investment and Industrial Demand Holding Up

Faucher sees a bright spot in business fixed investment—a category that includes machinery, technology, and R&D. 

“Business investment is about 23% higher than before the pandemic,” he said. “Companies that couldn’t find workers have invested in technologies to make their existing workforce more productive.”

That productivity push—driven by automation, robotics, and AI—has been seen in foundries. As Faucher explained, “Businesses were trying to increase output rapidly, and they were having trouble doing that because of the tight labor market. So, they invested in technologies that make their existing workforces more productive.”

Manufacturing Softness and Foundry Headwinds

Growth in manufacturing remains subdued in 2025. “We’re seeing some softness in manufacturing activity this year,” Faucher said. Industrial production in manufacturing is still about 5% below its pre-Great Recession peak, and high interest rates have weighed heavily on capital-intensive industries.

While the Federal Reserve cut interest rates twice in 2025, on Sept. 17 and Oct. 29, (after Faucher’s presentation), they remain higher than several years ago, making it more expensive for businesses and homeowners to borrow money. 

“High interest rates have been a drag on manufacturing, and weak global economic growth has been another drag,” said Faucher. He sees no indication that tariffs will cause a turnaround in manufacturing activity.

For foundries, the combination of slower global demand and elevated borrowing costs translates into thinner margins and delayed capital projects. At the same time, Faucher expects government infrastructure spending––especially under the Inflation Reduction Act and CHIPS and Science Act––to continue supporting construction-related metals demand.

The Labor Market is Tight but Weakening

Faucher devoted a significant portion of his talk to the labor market––a key issue for foundries struggling to fill skilled trade positions.

“Businesses were caught short with too few workers after the pandemic,” he said. “They had trouble hiring, and they know it’s still a tight labor market out there.” Even as hiring slows, “what they’re not doing is laying people off.”

Faucher explained that the labor force participation rate (the percentage of the working-age population that is either employed or actively looking for work) is structurally lower than it was before the pandemic, driven down by baby boomer retirements and immigration restrictions. It means foundries will continue to face persistent labor shortages and be under pressure to automate.
“While unemployment has been in inching up in recent months, it’s still historically low,” said Faucher. He expects the unemployment rate to rise modestly—from 4.3% to about 4.6% by late 2026—but stressed that “household balance sheets still look good.”

Consumer Resilience and Inflation Outlook

“Consumer spending makes up about two-thirds of the U.S. economy,” Faucher reminded the audience. “As long as consumers are doing well, as long as we have more jobs in the economy, as long as wages are rising in the economy, then we should have continued economic expansion.” According to Faucher, after-tax personal income has been steadily increasing since mid-2022.

Energy and food price inflation have eased since their pandemic-era peaks, but Faucher warned that goods inflation is moving higher again due to tariffs and supply adjustments. In addition, Faucher believes that core services inflation, tied to wages, is one of the key reasons why overall inflation is still running above the Federal Reserve’s 2% objective.

Faucher expects the Federal Reserve to cut rates at the next two meetings (December and January) bringing the federal funds rate to about 3.25% to 3.50%, but believes inflation will temper the Fed’s ability to respond to a weaker labor market.

Risks and Recession Odds

Speaking solely for himself and PNC (and not representing the views of AFS), Faucher predicts slower economic growth and a 40% chance of recession—high odds, but not inevitable. “Usually, the economy is in recession only about 10% of the time,” he said. “We’re not saying a recession is certain, but the risks are weighted to the downside.”

One recession predictor that Faucher is watching is the inverted yield curve on short-term and long-term U.S. Treasuries. When yields on long-term Treasuries are lower than short-term Treasuries, it’s called an inverted yield curve. “Historically, when we see that, a recession often follows,” he said. The U.S. Treasury yield curve was inverted from early July 2022 until September 2024. Recessions typically follow the inversion by six to 24 months. 

Faucher also noted the global economy is at “serious risk of recession” due to higher interest rates and tariffs. “Slower global economic growth and global recession weigh on the U.S. economy and make the U.S. economy more vulnerable to a downturn,” said Faucher. 

With risks from tariffs, reduced immigration, and a global downturn rising, foundries and their manufacturer customers will need to continue to adapt as they prepare for an economy that’s growing more slowly. 

What The Forecast Means for Foundries

1.    Tariffs raise costs for imported metals, alloys, and equipment, squeezing margins.
2.    High borrowing costs may delay capital upgrades—but automation investment remains a long-term necessity.
3.    Labor constraints will persist, driving demand for process efficiency and workforce development.
4.    Government infrastructure projects should support steady metals demand.
5.    Consumer confidence and a lack of layoffs remain the strongest defense against a downturn.