Goldman Sachs Research forecasts a robust 2026 for the U.S. economy, with growth outperforming expectations and inflation cooling further.
Key Highlights:
Stronger Growth: GDP is projected to grow 2.5% (Q4/Q4), above the 2.1% consensus. Recession risk is lowered to 20%.
Lower Inflation: Core PCE inflation is expected to fall to 2.1% by year-end, below official and market forecasts.
Key Drivers: The drag from tariffs is expected to fade, while business and personal tax cuts from recent legislation will boost activity. Productivity gains, aided by AI, will also play a larger role.
Fed Rate Cuts: The Fed is predicted to cut rates twice in 2026 (June & September, 25 bps each), with the terminal rate reaching 3%-3.25%.
Labor Market Uncertainty: The outlook is more mixed. While the unemployment rate is expected to stabilize at 4.5%, risks of further softening remain. Job growth is weak, and companies are increasingly eyeing AI as a tool to reduce labor costs, which could hinder hiring.
Inflation Confidence: Analysts believe underlying inflation progress has been masked by one-time tariff effects and that labor market rebalancing will help bring inflation to the Fed's target.
Bottom Line:
Goldman Sachs presents an optimistic yet nuanced view: expect a strong, productivity-led expansion with falling inflation in 2026, but watch the job market closely for potential AI-related disruptions and softening.
