Moody’s Analytics senior economist Mark Zandi expects the U.S. economy to post stronger growth in 2026, but warns that several key market segments are likely to struggle beneath the surface.
While real GDP growth is projected to accelerate to around 2.5%, the improvement is largely attributed to deficit-financed tax cuts under the One Big Beautiful Bill Act, with the boost from fiscal stimulus expected to peak in the second quarter of the year.
Beyond that point, underlying economic conditions are set to become more challenging.
According to Zandi’s outlook, the apparent growth momentum in 2026 will be accompanied by weaker job creation, rising unemployment, and higher inflation, he said in an X post on January 4.
These dynamics point to mounting pressure on labor-intensive industries and sectors sensitive to wage growth and consumer demand. As hiring slows and price pressures persist, parts of the economy that depend on strong employment growth and stable purchasing power are likely to face headwinds.
Impact on financial markets
Zandi added that financial markets are also expected to reflect this more subdued environment. Stock market performance in 2026 is forecast to be far more restrained than in recent years, suggesting limited upside for equities after a period of stronger gains.
At the same time, the housing market is expected to cool, with house price appreciation becoming more modest as higher inflation and softer labor market conditions weigh on affordability and demand. These trends point to potential strain for real estate, construction, and related industries.
Zandi’s assessment places the 2026 outlook in the context of recent performance. The US economy in 2025 broadly matched earlier forecasts, delivering growth just above 2%, though it fell short of the stronger expansion seen in 2024.
He noted that where projections missed the mark, it was largely due to overly optimistic expectations, particularly around unemployment and inflation, both of which ended up higher than anticipated.
To this end, that experience reinforces the caution embedded in the 2026 outlook, where fiscal stimulus may lift growth temporarily, but several major market sectors are expected to struggle as economic conditions tighten.
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