The U.S. Economy May Defy Expectations in 2026, Goldman Warns

Source: Coindoo Original Title: The U.S. Economy May Defy Expectations in 2026, Goldman Warns Original Link: The U.S. economy is heading into a very different kind of expansion phase, and economists at Goldman Sachs Group believe it may be stronger - and stranger - than many expect.

Their latest outlook suggests that growth in 2026 will rely less on hiring booms and more on efficiency, technology, and policy support.

Key Takeaways

• Goldman sees U.S. growth shifting toward productivity and technology
• Rate cuts are still expected even without a recession
• Inflation is cooling while consumer spending stays resilient
• Business investment is set to become the main growth driver

Instead of job creation leading the economy forward, Goldman expects productivity to take center stage. Companies are increasingly leaning on automation and artificial intelligence to do more with fewer workers, fundamentally changing how GDP growth is generated.

This marks a break from the previous cycle, where expanding labor supply played a key role. With immigration flows now lower, firms are adapting by improving output per worker rather than expanding payrolls. The result is an economy that can grow even if employment gains slow.

Why rate cuts are still coming

Despite lingering uncertainty in the labor market, Goldman expects the Federal Reserve to continue easing monetary policy. The bank’s base case includes two quarter-point rate cuts later in the year as inflation pressures continue to fade.

Importantly, this outlook does not hinge on a recession or a sharp rise in unemployment. Instead, economists see a scenario where growth remains intact while job creation cools – a dynamic that gives the Fed room to support activity without reigniting inflation.

Inflation fades without killing demand

Goldman’s outlook assumes inflation continues to drift closer to the Fed’s target. Slower price growth, combined with tax relief and rising real wages, is expected to support household spending even as consumers remain selective.

Rather than a consumption boom, economists see steady, sustainable spending that avoids overheating the economy. Rising household wealth also plays a role, helping buffer consumers against tighter credit conditions.

Businesses take the driver’s seat

One of the most notable shifts in Goldman’s forecast is the role of business investment. Capital spending is expected to outperform all other components of GDP growth in 2026, fueled by easier financial conditions, tax incentives, and greater clarity around economic policy.

Companies are expected to prioritize investments that boost efficiency – software, automation, AI infrastructure, and productivity-enhancing equipment – reinforcing the broader theme of growth without heavy reliance on labor expansion.

Politics shape the trade outlook

On trade, Goldman assumes the political focus will turn inward. With cost-of-living issues likely to dominate the conversation, aggressive new tariff measures that could push prices higher are expected to be avoided.

Tax-cut initiatives are also expected to continue supporting domestic growth, helping the U.S. maintain an edge over other developed economies.

More optimistic than the crowd

Compared with broader economist consensus, Goldman’s view stands out. While many forecasters expect U.S. growth to hover around trend levels, Goldman sees a stronger outcome driven by productivity gains rather than labor expansion.

The message is clear: the economy may look unusual by historical standards, but unusual does not necessarily mean weak. If productivity delivers as expected, 2026 could surprise on the upside.