Standard Chartered economists Dan Pan and Steve Englander argue that additional US tax refunds under the OBBBA will be smaller than markets and Congress expect, limiting their impact on 2026 US growth. They see a short-lived support to consumer spending and a partial offset to higher energy costs, but warn that a prolonged energy price shock and tighter financial conditions could increase downside risks.

Tax refunds offset energy shock temporarily

"US growth optimism for 2026 is built largely on expectations that tax cuts under the ‘One Big Beautiful Bill Act’ (OBBBA) will significantly boost consumer spending, despite the drag from the escalating Middle East conflict."

"Based on the latest IRS data (week ended 20 March), we estimate that additional refunds are unlikely to exceed USD 40bn (0.1% of GDP), well below the USD 90-150bn anticipated by Congress and some market participants."

"While the extra refunds may temporarily offset higher energy costs for US consumers, they are likely to fall short of “ushering in new golden age”, as Treasury Secretary Bessent claimed."

"If energy prices stay at current levels, the increase in tax refunds could fully offset higher energy spending for four to six months."

"The additional tax refunds support our view that the energy shock will have a limited near-term impact on GDP growth. But if the price shock stretches beyond half a year, demand compression may become more notable."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)