Goldman Sachs Projects Accelerated US Economic Growth for 2026 Despite Stagnant Job Market

Economic Growth Expected to Accelerate in 2026

Goldman Sachs forecasts US GDP growth will accelerate to 2.6% in 2026, driven by tax cuts, reduced tariff impacts, and more favorable financial conditions.[1] The investment bank's economists, led by Jan Hatzius, project that economic resilience from 2025 will carry into the new year as headwinds from tariffs and inflation begin to ease.[1]

Tax Refunds and Business Investment to Fuel Growth

Goldman Sachs estimates that consumers will receive an extra $100 billion in tax refunds in the first half of 2026, equivalent to approximately 0.4% of annual disposable income.[1] The bank also notes that business tax provisions allowing full expensing of plant and equipment spending have already begun boosting forward-looking capital expenditure indicators.[1]

The reduction in tariff drag represents a significant factor in the growth projection. The 11 percentage point increase in average effective tariff rates cut 0.6 percentage points from 2025 growth, but Goldman expects this headwind to diminish in 2026.[1]

Labor Market Remains Weak Despite Economic Growth

While economic growth is expected to accelerate, unemployment is projected to remain elevated at 4.5%, reflecting a stagnant labor market.[1] Goldman economists warn that unemployment could increase further if productivity-enabling AI applications arrive faster than expected or if company management teams intensify their focus on lowering labor costs.[1]

Inflation Progress Expected

Goldman Sachs projects progress in lowering inflation after it rebounded to near 3% during 2025.[1] The bank's economists attribute the elevated core PCE inflation of 2.8% in 2025 primarily to tariff pass-through, noting that without tariffs, inflation would have fallen to approximately 2.3%.[1]

Broader Economic Outlook

The forecast reflects cautious optimism about the US economy's trajectory. Professional economists surveyed by the Wall Street Journal expect GDP growth to slow to 2% with unemployment remaining in the low 4% range, and they do not anticipate a recession.[2] Markets currently assess only a 22% chance of recession in the US, though international economies face significantly higher recession risks, with China at 48%, Britain at 80%, and Germany at 91%.[2]