The outlook for the U.S. economy in 2026 is taking shape as major Wall Street firms release their early forecasts.
This follows a mixed 2025, characterized by slowing but still positive growth. GDP grew strongly in the second quarter, but the latter half of the year is expected to cool as consumer confidence weakens, retail spending softens, and tariffs and higher living costs weigh on households.
For 2026, most analysts anticipate continued expansion, though they differ on growth strength, the trajectory of inflation, and the risks that could shape the year.
Bank of America
Bank of America expects the U.S. to enter 2026 with solid momentum, projecting growth of 2.4% for the year. The bank points to a series of tailwinds that it believes will sustain the expansion.
The OBBBA stimulus is expected to add nearly half a percentage point to GDP through stronger consumer spending and higher capital expenditures, with additional momentum from the lagged effects of Fed rate cuts in the second half of the year.
Bank of America also expects a more supportive trade environment, ongoing AI-driven investment, and mechanical base effects from earlier disruptions to further lift growth.
Inflation is projected to remain above target, with headline PCE at 2.6% and core at 2.8%, while unemployment gradually eases to 4.3%. Overall, the bank sees 2026 as broadly positive, though macro risks remain.
JPMorgan
JPMorgan has taken a more cautious stance. While 2025 has been strong for equities, with the S&P 500 up double digits on AI-driven enthusiasm, the bank expects greater volatility in 2026.
Its research highlights emerging vulnerabilities, including cracks in the labor market, persistent cost-of-living pressures, and sticky inflation.
The bank also flagged several risks that could reshape the 2026 outlook. Tariffs remain a major uncertainty, with the Supreme Court reviewing Trump-era policies, potentially affecting up to $350 billion in annual revenue and complicating fiscal projections.
U.S.–China tensions are another concern, as China’s control over critical mineral supply chains poses risks to manufacturing, defense, and technology. Political risk also looms, with the 2026 midterms potentially introducing legislative gridlock if Democrats gain full control of Congress.
Finally, JPMorgan acknowledges upside from strong capex and AI adoption but stresses that these downside risks require close attention.
UBS
UBS focused on inflation, warning that the U.S. is not yet done with price pressures. The bank expects inflation to continue rising into the first half of 2026, driven primarily by tariff-related cost increases. Headline inflation has already risen 46 to 70 basis points from post-pandemic lows in April, with core inflation up 24 to 30 basis points.
UBS projects an additional 30 to 40 basis points increase, peaking around the second quarter of 2026, with core PCE reaching about 3.2% before gradually declining. The bank cautions that near-term data may be distorted, complicating trend analysis.
Inflation is expected to remain above the Fed’s 2% target through late 2026 and into early 2027, with core PCE at 2.9% in 2026 and 2.4% in 2027, signaling a prolonged effort to restore price stability.
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