Goldman Sachs Chief Economist Jan Hatzius stated in an outlook report that the global economy is expected to maintain steady expansion next year, though labor markets will remain sluggish while inflation gradually returns to central bank targets.
In the report titled "2026 Macro Outlook: Steady Growth, Stagnant Employment, and Price Stability," released on December 18, Goldman Sachs projected global GDP growth at 2.8% in 2026, above the market consensus of 2.5%. The bank expects the U.S. economy to continue outperforming other major developed economies, with GDP growth forecast at 2.6%, supported by easing tariff pressures, tax cuts, and looser financial conditions.
Meanwhile, Goldman Sachs predicts China's GDP will grow by 4.8% in 2026—also exceeding market expectations—as strong exports offset weak domestic demand. The eurozone's economic outlook appears more subdued, with projected growth of 1.3%, though Germany's fiscal stimulus and Spain's relatively stable expansion may partially offset long-term structural challenges.
The report warns that despite stable output growth, labor market improvements may lag behind economic expansion. Rising productivity has raised the GDP growth threshold needed for job creation, a disconnect particularly evident in the U.S., where unemployment continues to rise slowly despite solid GDP performance.
On inflation, Goldman Sachs expects a faster decline in 2026 after slower-than-expected disinflation in 2025. Core inflation in the U.S. and U.K. is projected to fall from around 3% to near 2% by late 2026, driven by fading tariff effects, slower wage growth, and cooling housing-related inflation. Lower oil prices, increased Chinese goods supply, and productivity gains should also help ease price pressures.
Goldman Sachs anticipates the Fed will cut rates by 50 basis points in 2026, bringing the federal funds rate to 3.0%–3.25%, with risks tilted toward further easing due to confidence in disinflation, labor market concerns, and potential Fed leadership changes. The bank also expects rate cuts in the U.K. and select emerging markets (notably Brazil), while the eurozone may hold rates steady.
Overall, Goldman Sachs views this macro backdrop as supportive for equities and many emerging market assets, suggesting markets may still underestimate the positive impact of "steady growth + falling inflation." However, elevated valuations—especially in AI-related sectors—and fragile labor markets could heighten volatility, with downside risks if growth expectations falter.
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