The US economy is poised for stronger growth in 2026, driven by reduced tariff pressures, increased tax relief for consumers, and easing financial conditions, according to a new outlook from Goldman Sachs. Despite a slowing labor market, the firm anticipates that several policy and economic factors will support a moderate rebound in real GDP.
This projection follows a year in which economic performance was subdued by unexpected tariff hikes and persistent inflationary pressures. While 2025 ended with signs of resilience, Goldman Sachs economists argue that 2026 will offer a more stable environment for expansion, even as employment indicators lag behind.
Tariff Relief and Tax Reforms Expected to Lift GDP
Goldman Sachs forecasts that the US economy will grow by 2.6% in real terms in 2026, exceeding the Bloomberg consensus of 2%. According to the firm’s analysis, the drag from increased tariffs, which weighed on growth in 2025, will likely fade next year. “Our explanation for the shortfall is that the average effective tariff rate rose 11pp, much more than the 4pp we assumed in our baseline forecast though somewhat less than the 14pp we assumed in our downside scenario.” wrote Jan Hatzius and his team in the firm’s 2026 economic outlook. They estimated that this tariff shock cut 0.6 percentage points from GDP in the second half of 2025.
However, the report notes that if tariff levels remain steady, their negative impact should diminish going forward. Alongside this easing of trade headwinds, consumers are expected to benefit from substantial tax relief through the One Big Beautiful Bill Act (OBBBA). Goldman Sachs estimates that an additional $100 billion in tax refunds will be issued in the first half of 2026, equivalent to about 0.4% of annual disposable income.
This fiscal stimulus, coupled with business tax provisions such as full expensing for capital investments, has already started to influence business spending indicators. According to the report, these measures are expected to reinforce domestic demand and capital formation through the first half of the year.
Labor Market Unlikely to Mirror Economic Gains
Despite the anticipated boost in growth, Goldman Sachs does not expect a meaningful rebound in the job market. The unemployment rate, which rose from 4.1% in June to 4.6% in November 2025, is forecast to stabilize around 4.5% in 2026. According to the firm’s analysis, labor market softness emerged prior to the government shutdown and reflects broader economic uncertainty, including shifts in immigration policy and federal downsizing.
Goldman Sachs economists also noted that productivity gains from artificial intelligence are not expected to fully materialize for several years. “We could easily imagine further unemployment rate increases in the near term if either productivity-enabling AI applications arrive more quickly than expected or company management teams increase their focus on lowering labor costs in 2026,” the report stated.
Inflation, another area of concern throughout 2025, is also expected to moderate. According to the firm, core PCE inflation remained elevated at 2.8% due largely to tariff pass-through, but may decline to just above 2% by the end of 2026 as these effects wear off.
While the overall economic picture is more optimistic, Goldman Sachs cautions that the uneven recovery between output and employment may persist. As the economy adapts to new fiscal and trade dynamics, the benefits may be more visible in corporate spending and consumer demand than in job creation.
