After a volatile performance in 2025, the US economy is expected to gain strong momentum in 2026 with impact from tax cuts and investments in artificial intelligence.
According to analyzes published by Reuters news agency and economic analysts, the United States (US) economy is expected to enter a period of significant consolidation in 2026, following volatile activity throughout 2025.
It is claimed that this expected acceleration will come after the recession, when hiring and layoffs were low, while businesses struggled with the Trump administration's trade policies and tight controls on immigration.
Experts predict that the main catalyst for growth will be consumer spending, fueled by rising tax refunds and reduced deductions due to President Donald Trump's fiscal policies.
It is reported that this regulation, often referred to by the authorities as “The Biggest Beautiful Bill”, provides comprehensive tax credits to companies and allows investment costs to be fully tax deductible.
The move is expected to expand capital spending not just to data centers but also to broader sectors of the economy.
Assessing the problem, Diane Swonk, chief economist at data analytics firm KPMG, said: “The support from fiscal stimulus alone could contribute 0.5% or more to first quarter GDP growth.”
WAGES MAY EXCEED INFLATION
Forecasts show the impact of tariffs on consumer prices is expected to peak in the first half of 2025, but with downward price pressure, wages could outpace inflation.
In terms of business investment, major technology companies such as Amazon and Alphabet have signaled that they will remain committed to the artificial intelligence infrastructure that underpins growth, even during last year's policy uncertainties.
On the other hand, the job market continues to be a source of concern for the Trump administration.
Data from the Conference Board think tank, shared by The Wall Street Journal (WSJ), revealed that consumer perceptions of the job market have dropped to levels not seen since the start of 2021.
The unemployment rate in November was 4.6%; However, this data is said to have been affected by data collection issues due to the six-week federal government shutdown that began October 1.
Additionally, the US Federal Reserve (Fed) is preparing for a transition period, with President Trump expected to appoint a new chairman to replace Jerome Powell, whose term expires in May.
Market watchers predict his successor will favor more aggressive interest rate cuts to boost growth.
Economists from Nomura, Japan's largest investment bank, emphasized that growth in 2025 remained resilient despite trade and immigration headwinds, and these headwinds have now eased as fiscal and monetary policies become more encouraging.
BILLIONS OF DOLLARS ARE FLOWING INTO FUTURE FUNDS
The rise of innovative financial instruments has attracted the attention of decision makers.
According to the Financial Times, billions of dollars are flowing into US exchange-traded funds (ETFs), specifically designed as tax-minimizing vehicles.
Known specifically as “Section 351” or “ETF mutual funds,” these funds allow wealthy investors to convert their existing stock portfolios into ETF shares without incurring capital gains taxes.
Against this backdrop, Ron Wyden, the top Democrat on the Senate Finance Committee, has proposed legislation to limit what he describes as “tax abuse.”
Although the investment firm lobby has strong influence in Washington, legal experts such as Fordham University School of Law Professor Jeffrey Colon warn that transit tax revenues are certain to decline unless legal action is taken.
“The government is aware of these problems, but has so far not shown any intention to take any action against them. The investment firms lobby is very strong,” Colon told the FT.
The pessimistic SCENARIO DOES NOT HAPPEN
From a broader perspective, the US economy has consistently defied pessimistic predictions made at the beginning of the administration's second term.
The economy grew at an annual rate of 4.3% in the third quarter of 2025, although many economists predicted a recession following the implementation of aggressive “Liberation Day” tariffs, which saw average import tariffs rise from 3% to nearly 17%.
This resilience is largely thanks to the top 10% of earners, who now account for about half of total national spending.
However, the sustainability of this growth is being questioned. According to Goldman Sachs economists, a weak job market remains the biggest recession risk, as “unemployment growth” leaves the economy vulnerable to external shocks and real disposable income remains stable.
