Goldman Sachs Chief Economist and Research Department Head Jan Hatzius, along with the new U.S. Equity Strategist Ben Snider, discussed the 2026 market outlook in an interview on 12/30. Both believe that the U.S. economy is expected to continue expanding in 2026, but the growth pattern will be different from the past few years. Against the backdrop of productivity improvements, easing inflation, and the Federal Reserve's policies gradually returning to neutral levels, employment, market valuations, and the AI investment cycle are entering an adjustment phase.

Economic growth continues but employment stabilizes, productivity rewriting traditional cycles

Hatzius stated that Goldman Sachs forecasts the U.S. real GDP growth rate for 2026 to be around 2.6%, with the overall economy still maintaining expansion and showing no signs of recession. However, even with continued economic growth, Goldman does not expect the unemployment rate to decrease simultaneously, projecting the unemployment rate to remain around 4.5% in 2026, reflecting a pattern of 'growth continuing, employment stabilizing'.

Hatzius points out that this does not reflect economic weakness but is related to productivity improvements. In the five years post-pandemic, the trend growth rate of U.S. productivity is about 2%, significantly higher than the pre-pandemic rate of about 1.5%, and this increase has not yet truly accounted for the impact of AI. Against the backdrop of accelerating productivity, economic growth may not necessarily create a large number of new jobs, which also explains why under the GDP growth in 2026, the unemployment rate may still remain relatively high.

The effects of tariffs are gradually fading, and inflation is aligning with the policy target.

Regarding inflation outlook, Goldman Sachs believes that the inflation data for 2025 is still affected by tariffs and statistical technical factors, but the inflation environment in 2026 will significantly improve. Hatzius pointed out that Goldman Sachs estimates that tariffs will raise core inflation by about 0.5 percentage points in 2025, lower than the previously expected 1 percentage point.

He described the impact of tariffs as closer to a one-time 'price level shift.' The current judgment is that the potential inflation level for 2026 is gradually approaching the policy target of 2%.

Policy returns to a neutral range, and the Federal Reserve still retains flexibility for interest rate cuts.

Regarding the path of monetary policy, Hatzius stated that Goldman Sachs maintains its forecasts from the past six months. In 2025, the Federal Reserve had conducted about 75 basis points of 'insurance-style rate cuts,' and it is still expected to cut rates twice in 2026, bringing the policy rate back to around 3% to 3.25% in the neutral range.

Currently, Goldman Sachs assumes that the timing of interest rate cuts will fall in March and June 2026, but it also admits there is a high degree of uncertainty. If the job market weakens further, the timing of interest rate cuts may be advanced. Conversely, if the economy and employment remain resilient, the timing of interest rate cuts may be postponed until the second half of the year.

Profit remains the core focus, and U.S. stocks return to fundamental valuation.

In terms of U.S. stock outlook, strategist Snider points out that Goldman Sachs's core judgment for U.S. stocks in 2026 remains 'returning to profitability itself.'

Goldman Sachs has released its 2026 S&P 500 index target of 7,676 points. This forecast is not based on rapid valuation expansion but on assumptions of ongoing corporate cash flow and profitability. Snider emphasizes that the stock market is essentially a discounting of future cash flows, and the most important factors influencing stock market performance remain corporate earnings and the overall economic environment.

AI investment has entered a cooling period, and long-term benefits are still awaiting accumulation.

When discussing AI, Snider stated that the market narrative for 2026 is noticeably different from the past three years. In recent years, investors focused on the rapid expansion of capital expenditures in AI infrastructure and who would 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 taking on higher debt, investment attitudes have turned more conservative.

Goldman Sachs has also officially incorporated the factors of AI productivity improvement into its 2026 S&P 500 profit forecast for the first time, but Snider emphasizes that this impact is still very small, contributing less than 0.5% to overall corporate profitability. Currently, investors still base their decisions primarily on current profits, and the market is still some distance from historical typical bubble stages, while the long-term benefits of AI to companies and the economy will gradually accumulate over time.

(Bank of America CEO: 2026 economic outlook is positive, AI investment is a key support momentum)

This article Goldman Sachs 2026 market outlook: The economy is still growing, AI investment momentum is slowing first appeared in Chain News ABMedia.