US economic outlook 2026: Four key calls for the year

US economic exceptionalism was one of our defining calls for 2025, and, in review, it proved correct. A combination of the AI-driven investment boom and strong spending by high-income consumers kept GDP growth at 2%, outperforming consensus expectations, even if slightly below our own. 

Looking ahead, we expect this pattern to persist. US GDP growth is set to outperform consensus again in 2026, supported by wealth effects, strong business equipment spending (AI and non-AI), and solid productivity gains. 

There are always factors that can cause the economy to deviate from our baseline and for 2026 we identified four key themes. 

Below is an abridged view of our 2026 US Key Themes analysis. To view the full report, please complete the form on the right.

2026 US key theme 1

A fragmented economy

The US economy will continue to expand near its short-run potential in 2026, but it will remain fragmented. In other words, the health of the economy will depend on who you ask. The fragmented economy will be visible among consumers, the labor market and by business size.

Jobless growth: A jobless expansion is taking hold. This occurs when GDP rises even as employment barely grows. This leaves the economy vulnerable to shocks because the labor market is the main firewall against a recession. 

Bifurcated consumers: The consumer will remain bifurcated next year as high-income households have plenty of tailwinds while lower income households continue to face several headwinds. Middle-income households will feel the drag of a slower labour market.

Small business struggles continue: The prospects for small businesses are not as bright as those for larger firms, reflecting another facet of the fragmented economy.

2026 US key theme 2

Core inflation becomes unstuck

We forecast core PCE inflation to moderate in 2026 but remain around Q4’s 2.3% y/y. Fading tariff effects, housing disinflation, and a neutral inflationary impulse from the labor market underpin the benign outlook. However, inflation uncertainty is higher than usual, driven by the risks of deglobalization, unfavorable demographics, the rapid AI buildout, and a more assertive fiscal policy. Though core inflation will move in the right direction, affordability will remain a significant issue and factor into the bifurcated consumer.  

2026 US key theme 3

AI boost will continue while broader equipment spending increases

The economy will continue to reap the benefits of increases in AI-related investment. We remain in Phase 2 of the AI cycle, characterized by heavy infrastructure investment, including data centres, hardware, and early adoption in tech-sensitive industries. However, the impact of AI capex on GDP growth will be smaller in 2026, making broader business investment more important. 

2026 US key theme 4

Round two of new trade order

After the shock of “Liberation Day” tariffs in 2025, the renegotiation of the United States–Mexico–Canada Agreement (USMCA) will become the focus in 2026. Similar to tariffs, the USMCA negotiations there are various scenarios to consider.  

US-China trade relations will also demand close monitoring as the world’s two largest economies attempt to decouple in a way that minimizes economic disruption. Trade policy will continue to prioritize strengthening the North American production ecosystem. 

US Outlook 2026

Overall, we expect the US economy to outperform consensus expectations again in 2026, supported by wealth effects, AI- and non-AI-related business equipment spending, and solid productivity growth. 

US exceptionalism will continue—but so will the vulnerabilities beneath the surface.