The U.S. economy is riding a wave of AI investments, expansive fiscal policy, and a shift in monetary policy that’s carrying markets forward. But for how long? Our 2026 market outlook examines the forces shaping both challenges and resilience in economic trends for the coming year.
Labor Market Trends Show Mixed Signals
While the unemployment rate remains historically low at 4.4%, it has slowly crept upward throughout the year. Despite this, other indicators point to underlying economic strength. A key question for 2026 is whether hiring weakness reflects economic uncertainty or a supply constraint driven by reduced immigration.
Economic Indicators Point to Steady Growth
Current economic conditions point to U.S. growth with enough momentum to sustain a steady pace through 2026. Despite early political and market turmoil, strong consumer and corporate balance sheets, rising home prices, and a surge in technology spending continue to support growth. Corporate earnings and margins stay solid, with S&P 500 earnings projected to rise about 14% in 2026. In other words, we don’t foresee unusual recession risk in our 2026 economic forecast.
Global Economic Trends Are Supporting the U.S. Outlook
Global economic momentum also provides a favorable backdrop for the U.S. outlook. Developed markets outside the U.S.—including Germany, Spain, Italy, Japan, and Australia—are growing above trend. Emerging markets have also rebounded after three years of below-trend growth. A broad global rebound makes a major U.S. slowdown unlikely and reinforces globalization’s role in driving earnings.
Consumer and Corporate Trends Reflect Continued Resilience
The biggest surprise in the state of the U.S. economy has been the speed and scale of AI investment, with tech hyperscalers planning $515 billion in capex by 2026. Consumer spending remains resilient as employers hold onto workers and asset prices rise. Households may also benefit from large tax refunds tied to retroactive OBBBA cuts.
Policy Trends Shaping the 2026 Economic Outlook
Three powerful policy forces are currently carrying the markets forward:
- Fiscal policy: The OBBBA keeps deficits at 6 to 8% of GDP for years, delivering recession-level stimulus.
- Monetary policy: The Fed is moving toward a 3% neutral rate, with markets pricing a dovish stance through 2026—the largest mid-cycle easing since the 1980s.
- Trade policy: The trade war has cooled, policymakers have avoided worst-case tariff scenarios, and they are focusing on limiting market volatility.
What These Economic Trends Mean for Investors
Our 2026 economic outlook favors staying invested rather than exiting, while preparing for normal midterm-year volatility. Key takeaways from our economic update include:
- Equities: The S&P 500 could rise 12 to 15% in 2026.
- Diversification: Global stocks may perform well while diversified U.S. stocks provide AI exposure.
- International stocks: Developed markets abroad trade at attractive valuations versus U.S. large-cap growth.
- Fixed income: Bonds may return 3 to 5%, roughly matching cash, but still offer long-term diversification benefits.
- Inflation hedges: Gold and managed futures can help protect portfolios in an inflationary growth environment.
Explore the 2026 Market Outlook
While some rough surf remains, the underlying swells are ridable, making the best strategy staying on board while keeping a watchful eye on the horizon for the next set of changes. Learn more about the current state of the U.S. economy and where it’s heading in 2026. Explore the report now.
The opinions contained in this complimentary download is provided entirely on behalf of CWM, LLC and is in no way related to Cetera Wealth Services LLC, or its registered representatives. This information is from sources believed to be reliable, but Cetera Wealth Services LLC cannot guarantee or represent that it is accurate or complete.
This blog contains statements related to our future business and financial performance and future events or developments involving Carson that may constitute forward-looking statements. These statements may be identified by words such as “expect,” “look forward to,” “anticipate” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “project” or words of similar meaning. Such statements are based on the current expectations and certain assumptions of Carson Group’s management, of which many are beyond Carson Group’s control. These are subject to a number of risks, uncertainties and factors which if one or more of these risks or uncertainties materialize, or should underlying expectations not occur or assumptions prove incorrect, actual results, performance or achievements of Carson Group may (negatively or positively) vary materially from those described explicitly or implicitly in the relevant forward-looking statement. Carson Group or any affiliates Carson Group neither intends, nor assumes any obligation, to update or revise these forward-looking statements in light of developments which differ from those anticipated.
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