Interview, Fireside Chat, Other
Goldman Sachs Exchanges: Outlook 2026 | Episode 1: The Big Picture
- Global growth is projected to remain solid through 2026, supported by U.S. tax cuts under the One Big Beautiful Bill Act, German fiscal easing, and tariff pressures moving sideways or declining.
- U.S. annual growth is forecast to comfortably exceed the market-implied view of just under 2% for the first half of the year, with the fourth quarter starting at a 2.5% pace.
- Productivity in the U.S. is expected to accelerate from 2% to 2.5% over the coming years as AI adoption deepens, whereas AI's measurable impact on 2025 GDP is not anticipated.
- The U.S. unemployment rate is forecast to stabilize around 4.5%, but a rise of 0.5 percentage points or more within a year is identified as a critical trigger for recession.
- Inflation in developed markets is expected to show downside pressure, with CPI and PCE decelerating toward central bank targets by year-end.
- Monetary policy is projected to ease further, with the Federal Reserve cutting rates to approximately 3% and the Bank of England implementing at least three additional cuts in the next three quarters.
- Japan's policy rate is expected to increase by another 50 basis points over the next 12 months through periodic adjustments, while the U.S. dollar is forecast to weaken moderately with a shallower gradient than in 2025.
- U.S. equities are expected to generate low double-digit returns in 2026, while global equity returns are projected to be comparable but slightly lower as the bull market progresses.
- Credit markets face a lower risk-reward profile due to tight spreads, with corporate balance sheets potentially past their peak and increasing reliance on debt to fund AI and data center booms.
- A potential credit widening dynamic could emerge if debt supply mirrors late-1990s patterns, compounding risks from high valuations and uncertainty regarding AI benefit timing.
- Market reactions to recession fears could include dramatic equity declines, wider credit spreads, and front-end U.S. rates pricing in a deeper, earlier easing path.
- China's current account surplus is projected to reach 1% of global GDP, the highest in recorded history, potentially creating a 1.5 percentage point drag on growth from its property sector and exerting negative trade pressure on European partners.
- Euro area growth is forecast at 1.3% in the shorter term, supported by defense and infrastructure spending in Germany for 2026 and 2027, while Spain is expected to outperform the region.
- Fiscal risks are anticipated to intensify in the first half of the year, as strong growth profiles persist before the inflation picture fully resolves, and the ongoing expansion of China's trade surplus may not be fully absorbed by markets.