On Oct. 15, 1929, the Yale economist Irving Fisher gave a small speech to an industry organization in New York City. It was the type of speech that would have been forgotten by history. But The New York Times was there. And Fisher, then one of the more respected economists in the nation, decided to make a bold prediction that would prove to have comically bad timing. Fisher declared that stock prices had reached "what looks like a permanently high plateau." Within two weeks, the stock market would crash spectacularly, ushering in the Great Depression. Ouch.
In more recent years, economic forecasters haven't been exactly hitting it out of the park either. They've consistently predicted that the economy would do worse than it actually did. Like when many thought that the pandemic recession would be long and painful. In reality, it was the shortest recession in U.S. history. And who can forget the seeming constant predictions that another recession was just around the corner? Like when the Fed began jacking up interest rates in 2022, or after President Trump announced high tariffs on "Liberation Day." Yet still, no recession (although, many point out that economic growth is disappointingly "K-shaped," with richer Americans and AI-related companies thriving and spending enough money to keep the economy out of a recession while poorer Americans are struggling; check out a recent Planet Money episode for more on this).
So, yeah, you should probably take economic forecasts with a grain — heck, a giant heap — of salt. All that said … It's still interesting to get a sense of what professional forecasters are predicting about 2026. We decided to provide you with a quick round-up of some prominent predictions about the U.S. economy.
Overall, it seems that most forecasters believe that, despite some headwinds, the odds are that the economy will not enter a recession this year. It will continue growing at a moderate pace. That said, many seem to believe that economic growth this year will continue to be K-shaped — with richer Americans and AI-related companies doing great and the rest not so much.
Some Economic Predictions For 2026
The Economist magazine, in their annual prediction issue "The World Ahead," foresees a range of threats to economic growth, from tariffs and trade wars, to high deficits and inflation, to Trump's undermining of the Fed's independence, which they write could "cast doubt on the central bank's long-term inflation-fighting credibility." Those factors will "throw plenty more sand in the gears" of the economy, they write. But the magazine (or newspaper, as they call themselves) stresses that the economy has proven resilient in recent years, and they predict looming threats to growth "are less likely to cause a crash than some might fear." They forecast that America and the world should expect "mediocre growth" in 2026.
Goldman Sachs is more optimistic about U.S. economic growth this year. "The U.S. is expected to substantially outperform consensus estimates because of tax cuts, easier financial conditions, and a reduced drag on the economy from tariffs," they write. Goldman Sachs seems to believe that most of the inflationary impact and uncertainty from tariffs is over, and they see the economy being lifted by a kind of stimulus from tax cuts in the so-called "One Big Beautiful Bill Act," which was signed into law by Trump on July 4, 2025, (for more on this legislation, check out this Planet Money episode). "As a result of tax cuts, for example, consumers will receive around an extra $100 billion (0.4% of annual disposable income) in tax refunds in the first half of next year." Goldman Sachs projects that U.S. GDP growth will be 2.6%. For comparison, that's slightly lower than what economic growth was in the U.S. in 2024.
Bank of America is similarly upbeat about economic growth in 2026. Sure, they write, there are reasons to be concerned about the economy, including a lot of uncertainty about government policies and the ultimate promise of AI. "Despite these lingering concerns, our team remains bullish on the economy and AI," said Candace Browning, head of Bank of America Global Research, in a recent report. "We are optimistic on the two most influential economies, expecting above-consensus GDP growth for the U.S. and China. Furthermore, concerns about an imminent AI bubble are overstated, in our view, and we expect AI investment to continue to grow at a solid pace in 2026."
J.P. Morgan is a bit more of a Debbie Downer. Sure, they too, "expect the global economy to remain resilient in 2026, with AI investment continuing to drive market dynamics and support growth." But they also note that there's a lot to be concerned about, including more potential trade wars, inflation, "sluggish non-tech demand," and a weakening labor market. They estimate there is a 35% chance America and the world will enter a recession in 2026.
A recent report from the accounting juggernaut EY (formerly Ernst & Young) suggests that "K-shaped" economic growth will continue to be a big story in 2026. They predict that the economy will slightly slow this year, but it will continue to be lifted by the spending of wealthy Americans and companies investing in AI. "Consumer spending is likely to remain uneven," they write, "high-income households will continue to drive outlays while lower-income families will remain under pressure due to higher prices, slower wage and job growth, and elevated borrowing costs."
The Federal Reserve Bank of St. Louis looked, more broadly, at what professional forecasters are saying about the U.S. economy in 2026 (they analyzed the "Blue Chip survey" of about 50 professional economic forecasters). They find that there's considerable disagreement among forecasters. For example, "the average of the top 10 GDP growth rate forecasts is 2.5%, while the average of the bottom 10 forecasts is 1.2%." Some see "the unemployment rate rising while others predict it will fall." Likewise, some see inflation accelerating and others predict it will continue slowing. "The lack of government statistics about the economy over the past few months could be one reason for the greater degree of disagreement among forecasters," they note.
So, yeah, most forecasters believe that the economy will not go down the toilet in 2026. They're basically predicting more of the same, which would be good news if you have a lot of money invested in the stock market or work in the AI space, but probably less good news if you're an American living paycheck to paycheck.
Whatever the economy brings in 2026, we'll be covering it all. If you're not already subscribed, you can subscribe here. Happy New Year!
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