Goldman Sachs 2026 Market Outlook: Economy Still Growing, AI Investment Momentum Slowing

Goldman Sachs (Goldman Sachs) Chief Economist and Head of Research Jan Hatzius, along with newly appointed US Equity Strategist Ben Snider, were interviewed on 12/30 to discuss the 2026 market outlook. Both believe that the US economy can still maintain expansion in 2026, but the growth pattern will differ from previous years. Against the backdrop of productivity improvements, easing inflation, and the Federal Reserve gradually returning to a neutral policy stance, employment, market valuations, and AI investment cycles are entering a phase of adjustment.

Economy Continues to Grow but Employment Stabilizes; Productivity Reshapes Traditional Cycles

Hatzius stated that Goldman Sachs estimates the US real GDP growth rate in 2026 to be about 2.6%, with the overall economy remaining in expansion and no signs of recession. However, even with continued economic growth, Goldman does not expect unemployment to decline simultaneously; the unemployment rate in 2026 is expected to remain around 4.5%, showing a pattern of “growth still ongoing, employment stabilizing.”

Hatzius pointed out that this is not a sign of economic weakness but is related to productivity improvements. Over the five years following the pandemic, the US trend productivity growth rate has been about 2%, significantly higher than the pre-pandemic rate of approximately 1.5%, and this wave of improvement has not yet fully incorporated AI’s impact. In the context of accelerated productivity, economic growth may not necessarily create大量 new employment opportunities, which also explains why, despite GDP growth in 2026, the unemployment rate could still remain relatively high.

Gradual Fade of Tariff Effects, Inflation Approaching Policy Targets

Regarding inflation outlook, Goldman Sachs believes that inflation data in 2025 will still be affected by tariffs and statistical technical factors, but the inflation environment will improve significantly in 2026. Hatzius noted that Goldman estimates tariffs contributed about 0.5 percentage points to core inflation in 2025, lower than the original expectation of 1 percentage point.

He described the impact of tariffs as more akin to a one-time “price level increase.” The current assessment is that the potential inflation level in 2026 is gradually approaching the 2% policy target.

Policy Returning to Neutral Zone, Fed Still Has Room to Cut Rates

On monetary policy path, Hatzius stated that Goldman Sachs maintains its forecast from the past six months. The Federal Reserve has already implemented about 75 basis points of “insurance rate cuts” in 2025, and is expected to cut rates twice more in 2026, bringing the policy rate down to approximately 3% to 3.25%, within the neutral zone.

Currently, Goldman assumes rate cuts will occur in March and June 2026, but admits there is high uncertainty. If the labor market weakens further, rate cuts could come earlier. Conversely, if the economy and employment remain resilient, the timing of rate cuts could be delayed until the second half of the year.

Profitability Remains Core Focus, US Stocks Return to Fundamentals Valuation

Regarding US stock market outlook, Strategist Snider pointed out that Goldman Sachs’s core view for 2026 remains “returning to profit fundamentals.”

Goldman has set a target of 7,676 points for the S&P 500 in 2026. This forecast is not based on rapid valuation expansion but on assumptions of continued corporate cash flows and earnings. Snider emphasized that the stock market is essentially a discounted future cash flow, and the most important factors influencing market performance are corporate earnings and the overall economic environment.

AI Investment Enters Cooling Period, Long-term Benefits Still Need Accumulation

Talking about AI, Snider said that the market narrative in 2026 is markedly different from the past three years. In recent years, investors focused on the rapid expansion of AI infrastructure capital expenditures and who could directly benefit from this wave of investment. However, as the market gradually realizes that AI investment growth will slow in 2026 and that sustained growth may require higher debt levels, investment attitudes have become more cautious.

Goldman Sachs also officially incorporated AI productivity improvements into its 2026 S&P 500 earnings forecast for the first time, but Snider emphasized that this impact remains small, contributing less than 0.5% to overall corporate profits. Currently, investors mainly rely on current earnings, and the market is still some distance from typical historical bubble stages. The long-term benefits of AI for companies and the economy will continue to accumulate over time.

(Bank of America CEO: 2026 Economic Outlook Slightly Positive, AI Investment as Key Support )

This article, Goldman Sachs 2026 Market Outlook: Economy Still Growing, AI Investment Momentum Slowing, was first published on ABMedia.