Goldman Predicts Robust US Expansion, Mild Inflation and Two Rate Reductions by the Fed

Goldman Sachs Predicts Economic Growth for the US in 2026

According to economists at Goldman Sachs, the United States is expected to experience economic momentum in 2026, fueled by tax reductions, increased real wages, and growing household wealth. Inflation is anticipated to ease during this period.

The Federal Reserve is projected to implement two additional interest rate reductions of 25 basis points each, likely occurring in June and September, as outlined in Goldman Sachs' US Economic Outlook for 2026.

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Shifting Drivers of Economic Growth

David Mericle, chief US economist at Goldman Sachs, noted that the factors behind GDP expansion are expected to change compared to previous cycles. Productivity improvements—especially those driven by advancements in artificial intelligence—will play a larger role, while growth from labor supply is likely to diminish due to lower immigration rates.

Bloomberg’s December survey of economists predicted a 2% growth rate for the US in 2026, mirroring the outlook for 2025. The continuation of President Donald Trump’s tax cut policies is believed to help the US maintain its economic edge over other developed nations.

Goldman Sachs’ Optimistic Projections

• GDP is forecast to rise by 2.5% (Q4 over Q4) or 2.8% for the entire year in 2026.
• Core PCE inflation is expected to reach 2.1% year-over-year by December, with core CPI dropping to 2%.
• The unemployment rate is projected to hold steady at 4.5%. However, there is a possibility of a period where job growth stagnates as businesses increasingly adopt AI to cut labor expenses.

Trade and Consumer Outlook

Goldman Sachs anticipates that the upcoming mid-term elections will bring cost-of-living concerns to the forefront, prompting the administration to refrain from imposing significant new tariffs.

Consumer expenditures are likely to continue climbing, supported by tax relief and higher real incomes. Business investment is expected to be the primary driver of GDP in 2026, bolstered by improved financial conditions, greater policy clarity, and favorable tax policies, according to Mericle.

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Source: Bloomberg L.P., 2026