(Jan 12): The US economy this year will get a boost from tax cuts, real wage gains and rising wealth, while inflation will moderate, according to economists at Goldman Sachs Group Inc.
With the outlook for the labour market more uncertain, the Federal Reserve (Fed) is set to deliver two more 25 basis-point interest rate cuts — in June and September — according to the bank’s 2026 US Economic Outlook report dated Jan 11.
“The composition of gross domestic product (GDP) growth will look different from last cycle in the years ahead,” wrote David Mericle, Goldman’s chief US economist. “More will come from productivity growth, which has rebounded and should receive a boost from artificial intelligence (AI), and less will come from labour supply growth with immigration now much lower.”
Economists surveyed by Bloomberg in mid-December expected US growth of 2% in 2026 — the same as their forecast for 2025. US President Donald Trump’s tax-cuts package is seen sustaining America’s streak of outperformance of its developed-world peers.
Goldman’s forecasts are more bullish:
- A GDP growth rate of 2.5% in 2026 (on a fourth-quarter-on-fourth-quarter basis) or 2.8% on a full-year basis.
- Core personal consumptions expenditures inflation of 2.1% year-on-year by December, with the core consumer price index slowing to 2%.
- The baseline sees the unemployment rate stabilising at 4.5%, but there’s a risk of a period of jobless growth as companies look to use AI to reduce labour costs.
See also: The Fed will 'abandon' 2% inflation goal, says Bill Ackman
On trade, Goldman assumes the upcoming mid-term elections will see cost-of-living issues emerge as a major political theme, leading the White House to avoid any significant further tariff increases.
Consumer spending should grow steadily, supported by tax cuts and real wage gains. Business investment will be the strongest component of GDP in 2026, benefiting from easier financial conditions, reduced policy uncertainty and tax incentives, Mericle wrote.
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