Goldman Sachs: Inflation in the US is expected to be moderate in 2026, with the Federal Reserve cutting interest rates twice.

Goldman Sachs expects that this year, the US economy will benefit from tax cuts, real wage growth, and increased wealth, while inflation will tend to be moderate. The bank predicts that the Federal Reserve will cut interest rates by 25 basis points each in June and September. David Mericle, Goldman Sachs chief US economist, pointed out in the US Economic Outlook for 2026 released on January 11 that the composition of US GDP growth in the coming years will differ from the previous cycle, with more growth coming from productivity improvements. This metric has already rebounded and is expected to be boosted by artificial intelligence, while the contribution from labor supply growth will decrease, due to current significantly lower immigration levels. Goldman's forecast is more optimistic than the general market consensus. Economists surveyed by Bloomberg in mid-December expect US economic growth of 2% in 2026, while Goldman forecasts 2.8% GDP growth. Given greater uncertainty in the labor market outlook, the Federal Reserve will act cautiously on monetary policy. **Economic growth expectations exceed market consensus, inflation to fall back near target** Goldman's forecast for the US economy in 2026 is significantly higher than market consensus. The bank expects GDP growth of 2.5% (quarter-on-quarter, Q4 basis) and 2.8% for the whole year. Goldman expects steady growth in consumer spending, supported by tax cuts and real wage increases. Business investment will be the strongest component of GDP in 2026, benefiting from looser financial conditions, reduced policy uncertainty, and tax incentives. Goldman expects the core Personal Consumption Expenditures (PCE) price index to rise 2.1% year-on-year by December, and the core Consumer Price Index (CPI) to slow to 2%. This forecast shows inflation will further approach the Federal Reserve's 2% target. Goldman's baseline scenario expects the unemployment rate to stabilize at 4.5%. However, the bank warns that there is a risk of a period of “no job growth,” as companies may seek to use artificial intelligence to reduce labor costs. On trade issues, Goldman assumes that the upcoming midterm elections will make the cost of living a major political issue, which will prompt the White House to avoid further significant tariff increases. **Risk Warning and Disclaimer** The market has risks, investment needs caution. This article does not constitute personal investment advice and does not take into account individual users’ specific investment objectives, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article fit their particular circumstances. Investment based on this information is at your own risk.