Goldman Sachs has given a growth forecast for the U.S. economy in 2026 that exceeds market expectations, according to a recent report. Despite challenges such as tariffs and a slowdown in employment, the report suggests that thanks to the fiscal windfall from the “Big and Beautiful Act,” robust corporate profits cushioning the impact, and easing interest rates post shift in monetary policy, the economy still has the potential for accelerated growth.
Led by Jan Hatzius, Goldman Sachs’ team of economists forecasts a real GDP growth rate of 2.6% for the U.S. in 2026, significantly higher than the general market expectation of 2%.
Hatzius acknowledges that while the impact of tariffs in 2025 was greater than anticipated, as the negative effects wane, the economy will regain momentum. He wrote in the report, “Although the forces propelling the U.S. economy ultimately overcame tariff resistance as we expected, the process was not without challenges.”
Columnist Bill Stone from Forbes concurs with this assessment and cites data indicating that the annualized GDP growth rate for the third quarter of 2025 reached 4.3%, showcasing “astonishing resilience.”
However, the report also points out that despite strong growth, the stagnation in the labor market still warrants attention.
According to Goldman Sachs’ research data model, various tax breaks, incentive measures, and direct refunds related to the Act are projected to accumulate to $749 billion from its implementation in 2025 to the end of 2026, serving as the core foundation supporting the 2.6% growth forecast.
$100 billion in tax refunds:
Goldman Sachs estimates that consumers will receive $100 billion in tax refunds in the first half of 2026 alone under the “Big and Beautiful Act.” Reuters adds that tax exemptions for tips, overtime pay, and deductions for auto loan interest (limited to U.S.-assembled vehicles) will significantly increase households’ disposable income.
Encouraging business investments:
The Act permanently extends the policy of full expensing for research and equipment purchases. This policy primarily involves 100% bonus depreciation, allowing businesses to tax deduct the full amount in the year of purchasing eligible equipment (such as machinery, software), which has a significant impact on expanding manufacturing in places like Michigan.
Profits and tariff buffering:
Stone highlights that corporate profits accelerated by 9.1% year-on-year in the third quarter of 2025. Historical data shows that the U.S. economy has never experienced a recession when profits have grown year-on-year. This 9.1% growth rate provides a significant margin of safety.
Apart from fiscal policy, improvements in the financial environment are also crucial, including market expectations of further rate cuts in 2026, seen as a vital catalyst for easing pressure on the real estate market and restarting the housing transaction chain.
Monetary policy:
According to Forbes, the Federal Reserve has cut rates by 1.75 percentage points in this round of cycles, and the current federal funds rate target range is 3.50% to 3.75%.
Goldman Sachs’ model indicates that lowering the federal funds rate to the range of 3.25% to 3.5% (another 25 basis points cut) could break the “lock-in effect” in the real estate market.
AI and productivity:
Goldman Sachs notes that while the substantial benefits of artificial intelligence (AI) to the economy are expected to fully manifest in a few years, early automation applications are already making inroads in the corporate sector, becoming an essential management tool for maintaining profit margins in the face of rising costs.
Market confidence:
Bank stocks outperformed the “Magnificent 7” in the U.S. market in 2025, reflecting confidence in an economy free from recession scenarios.
Despite strong growth, concerns remain about the labor market stagnation.
Goldman Sachs projects the unemployment rate to stabilize around 4.5% in 2026. Hatzius specifically highlights a “disconnect” phenomenon: despite GDP growth, job creation is slowing down. He warns that, “If corporate management intensifies cost-cutting efforts in 2026, the unemployment rate may further rise in the short term.”
While the job market faces bottlenecks, economic pressures are easing on the price front. Previous tariff pass-throughs had kept core inflation above 3% in 2025, but Goldman Sachs predicts that as supply chains digest tariffs, by the end of 2026, the core PCE price index is expected to fall to slightly above the 2% target level.