Economy, weather, and CO₂

U.S. macroeconomics
The macroeconomic forecast that underlies the STEO was mostly unchanged from last month. Our forecast still assumes GDP will grow by 1.4% in 2025, while the forecast for 2026 GDP growth was revised up by 0.1 percentage point from 1.9% to 2.0%.

The macroeconomic assumptions in the STEO are based on S&P Global’s macroeconomic model. We incorporate STEO energy price forecasts into the model to obtain the final macroeconomic assumptions.

The U.S. Bureau of Economic Analysis (BEA) released the Advance Estimate of 2Q25 GDP on July 31, after the macroeconomic assumptions that underlie the STEO were finalized. The report showed GDP grew at an annualized rate of 3.0% in 2Q25, more than the 1.4% growth our forecast currently assumes. In addition, 1Q25 growth was revised lower by 0.3 percentage points, from -0.2% to -0.5%.

The decline in 1Q25 and subsequent rebound in 2Q25 was largely due to changes in import volumes over the first half of the year as consumers and firms reacted to trade policy announcements. Real imports of goods and services grew at an annualized rate of 38% in 1Q25 and contracted by 29% in 2Q25.

When imported goods arrive at their port of entry, they are primarily transported by truck to their final destinations. Trucking is a major consumer of diesel fuel, which is a subcategory of distillate fuel. As a result, significant shifts in the volume of imported goods can affect overall distillate fuel demand. Our current forecast assumes that real imports will be less volatile after 2Q25; however, future changes in trade policy could alter that assumption. Trade policy and its potential macroeconomic impacts remain a source of uncertainty in our outlook.

Emissions
We forecast U.S. energy-related carbon dioxide (CO₂) emissions to increase by 1.6% in 2025, followed by a decrease of around 1.1% in 2026. Coal, natural gas, and petroleum products all contribute to rising emissions in 2025, with the largest emissions increase observed from coal. Emission decreases in 2026 are mostly from coal.

We expect to see larger annual emissions increases in 2025 than were forecast in the July STEO, as well as smaller subsequent emissions decreases in 2026. For 2025, we expect more emissions from coal than we did last month because of higher coal demand from the power sector than in the July STEO. Petroleum-related emissions in 2025 also increase more than was anticipated last month.

For 2026, we still expect emissions to decline but not to the extent that was forecast in the July STEO. We now forecast almost no change in emissions from natural gas relative to 2025. We also expect petroleum emissions to fall less than we had forecast last month, largely because of more consumption of transportation fuels. We expect a drop in emissions from coal next year. However, similar to our forecast for 2025, we raised our expectation of the power sector’s coal consumption, leading to more coal-related emissions than forecast last month.

Weather
The United States averaged 464 cooling degree days (CDDs) in the second quarter of 2025 (2Q25), 6% fewer CDDs than in the same period last year. Based on our current forecasts and data from the National Oceanic and Atmospheric Administration, we expect temperatures in August will be relatively similar to August 2024 and the 10-year monthly average.

As the summer months come to an end, we expect the cooler weather to extend through 2025 with the U.S. averaging 1,430 heating degree days (HDDs) in 4Q25, 8% more HDDs than in 4Q24.