Goldman Sachs forecasts the U.S. economy will expand faster than most market estimates in 2026, citing a combination of tax relief, retreating tariff headwinds and more accommodative financial conditions as the main propellants for growth.
In a note prepared by analysts that included Pierfrancesco Mei, Goldman put fourth quarter-to-fourth quarter GDP growth at 2.5% for 2026, above the Bloomberg consensus projection of 2.1%. For the calendar year as a whole, the bank expects GDP to increase 2.8%.
Those projections come against a backdrop of recent data showing the economy decelerated to a seasonally and inflation-adjusted annual rate of 1.4% in the fourth quarter of last year. Goldman and others attribute that slowdown in large part to the effect of a sustained federal government closure that ended in November. On an annual comparison, total U.S. output rose 2.2% in 2025 versus the prior year, representing the slowest rate of expansion since 2020.
Economists have described domestic activity as uneven, with stronger spending among higher-income cohorts and more muted demand among lower-earning households. Nevertheless, activity has been characterized as broadly resilient.
Goldman said the central rationale for its 2026 outlook is that the negative impact from tariff increases should give way to positive impulses from business and personal tax reductions embedded in the One Big Beautiful Bill Act, the budget legislation enacted last year. The analysts wrote that reduced policy uncertainty, together with easier financial conditions, should support a rebound in business investment, which Goldman expects to be the strongest contributor to GDP in 2026.
The projection follows legal and policy developments around tariffs. The Supreme Court recently ruled against the administration's use of emergency economic authorities to impose so-called "reciprocal" tariffs on multiple countries. In response, the administration instituted a temporary 10% global tariff and has signaled the option of increasing that levy to 15%.
Monetary policy is another component of the baseline outlook. Policymakers at the Federal Reserve are anticipated to resume cutting interest rates later in the year after pausing a recent sequence of reductions in January, a dynamic Goldman views as consistent with the easier financial conditions that should underpin investment.
Despite the optimistic baseline, Goldman highlighted several potential headwinds that could meaningfully trim growth. The analysts singled out a pronounced equity market correction as the most important near-term risk to the expansion. Their estimate indicates that a 10% fall in stock prices sustained through the second quarter would reduce GDP by roughly 0.5 percentage points.
They wrote, "Our analysis suggests that a sharp equity correction represents the most significant near-term risk." A substantial drop in equities could weaken consumer spending, which remains a central engine of the U.S. economy.
The analysts also flagged disruptions from artificial intelligence as a source of downside risk for a labor market that has shown signs of stabilizing. They noted that if AI-related displacements lift the unemployment rate, consumer demand would likely be dampened.
Additional channels that could subdue growth include a greater pass-through of tariff-related costs to consumers, spikes in oil prices tied to geopolitical tensions, and strains in private lending markets. Goldman emphasized that no single one of these risks would likely push the economy into recession unless the shock were extremely large. However, the concurrent realization of several shocks could be more damaging.
In particular, the analysts warned that the combination of an equity sell-off and AI-driven labor market disruption, if not accompanied by offsetting productivity gains, could create substantial growth headwinds. In such a scenario, they wrote, the Fed would probably respond by cutting interest rates more aggressively to counteract some of the adverse effects.
Overall, Goldman’s outlook balances an above-consensus growth forecast for 2026 grounded in policy shifts and financial easing against the possibility that market and technological dislocations, among other shocks, could substantially weaken activity if they occur together.
Impacted sectors and dynamics
- Business investment - Goldman expects this to be the strongest GDP component in 2026 if policy uncertainty falls and financial conditions ease.
- Consumer spending - Vulnerable to equity market corrections and rises in unemployment from AI-related disruptions.
- Energy and private credit - Growth could be hurt by oil price spikes from geopolitical tensions and stress in private lending markets.