It’s certainly challenging to look ahead to 2026, especially with so many moving parts in the global and domestic economy, but let’s dive into what the major financial institutions and publications are forecasting.

To help better understand these forecasts, Bridge Business Credit presents a collection of sources that focus on economic outlooks for 2026. As you’ll read further, the predictions explore a host of variables, all subject to change in this environment.

The consensus is that the U.S. economy will be characterized by slow but steady growth, heavily influenced by political choices, AI investment, and persistent inflation pressures.

Here’s a sampling of sources covering the U.S. economic outlook for 2026.

U-M Researchers See Sluggish Scenario

In its latest forecast report, the University of Michigan’s Department of Economics presented this summary: “We project the pace of growth to ramp back up to 2.0% by mid-2026 and then to accelerate to the 2.2-2.3% range in 2027. The 2026-27 growth reacceleration will be fueled by looser monetary policy and lower personal and business taxes.”

The report continues, “The employment outlook is mixed. While the labor market is showing signs of stress due to increased layoffs in the private and government sectors. The labor participation rate is expected to decrease as the baby boom generation continues to retire, the pace of immigration slows, and the labor market softens..”

CEOs Weigh in on Future Prospects

The Conference Board’s latest Measure of CEO Confidence™ survey of 130 CEOs reports that over the next 12-18 months, most CEOs (64 percent) expected a mild economic slowdown with slightly increased inflation pressure. Only 4 percent expected a recession. Geopolitical instability and cyber risks continued to dominate top business risks impacting CEOs’ industries, closely followed by AI and innovation. Meanwhile, trade and tariffs risks were pushed down to fifth place by legal and regulatory risks.

The Political and Tariff Tightrope

The most significant wildcard impacting the 2026 outlook, many suggest, is the political landscape, particularly trade policy and fiscal stability.

The Wall Street Journal has, in several reports, highlighted the deep uncertainty surrounding the extension of major tax cuts and the impact of the Federal Trade Commission’s (FTC) enforcement approach.

The potential for aggressive, politically targeted enforcement could disrupt mergers, acquisitions, and business decision-making, leading to “inefficient outcomes including, but not limited to, increased costs, lower quality products, and less output,” according to commentary on the FTC’s strategic plan.

In addition, tariffs remain a constant source of uncertainty. While the effects of recent tariffs haven’t been as immediately detrimental as some feared, the IMF cautions that this is a “temporary relief, rather than underlying strength in economic fundamentals.” The IMF analysis suggests that the burden of tariffs falls mainly on U.S. importers, who are eventually expected to transfer these higher costs to consumers.

Tech Investment and the Job Market

On the upside, technology investment, particularly in artificial intelligence (AI), is acting as a strong counterweight to the economic drag factors. Companies are pouring vast sums of money into infrastructure, keeping business investment figures relatively robust.

According to reporting in Barron’s, AI-related spending remains a significant driver of fixed business investment. Companies are merging major business segments into a new “cloud & AI” segment to focus their resources, catching the attention of investors.

However, the job market is facing its own crosscurrents. The AI boom is occurring alongside a general slowdown in employment growth. As firms focus on managing labor expenses in the face of cost volatility, job creation is expected to weaken, with some forecasts predicting the unemployment rate could rise modestly.

Ultimately, as one report summarized, growth is expected to be “headcount neutral” as companies look to control expenses even while anticipating revenue increases.

What’s the Impact for Investors?

At brokerage-financial advisors Edward Jones, its chief investment strategist, Mona Mahajan, anticipates a potential market reacceleration in 2026, driven by several positive momentum factors.

Appearing on CNBC, Mahajan highlighted three key elements: the Fed potentially moving rates lower, fiscal thrust from the recently enacted tax bill, and substantial cash reserves that could re-enter the market.

She expressed optimism about the long-term market outlook, despite recent volitivity concerns, adding that as interest rates potentially decline over the next year, investors currently sitting on the sidelines might be enticed to reinvest, beginning by reallocating funds from money market accounts back into equities.

Addressing inflation concerns, Mahajan acknowledged potential pressures from tariffs but maintained an optimistic outlook. While she suggested inflation might rise to the 2.5-3.5 percent range, she doesn’t anticipate a return to the 8-9 percent levels experienced post-pandemic.

Key Takeaways for 2026

So, where does that leave us?

1. Slowing but not stalling: The IMF’s GDP forecast of around 2.1 percent suggests a gentle deceleration rather than a recession, though the risks are skewed to the downside.
2. Inflation is sticky: Inflation remains the primary concern. Tariff costs are expected to be passed on to the consumer, making the Fed’s job of hitting its target more complicated.
3. The AI lifeline: Massive tech investment is preventing a sharper slowdown in capital spending, offering a productivity boost, but its effects on mass employment are mixed.
4. Fiscal uncertainty: As the Wall Street Journal frequently notes, uncertainty over tax policy and growing national debt will continue to cloud the long-term fiscal outlook for taxpayers and businesses, demanding hard budgetary decisions.

For those following the economy in 2026, like our team at Bridge, we’ll be closely watching a tug-of-war of sorts with AI investment still pulling things forward, while persistent inflation and political uncertainty tug back.

If you need assistance in understanding how we can assist your company as you seek to grow and prosper, feel free to contact our CEO, Rhett Rowe (rowe@bridgebusinesscredit.com), or any other member of the Bridge team.