Goldman Sachs Says Tax Cuts and Tariff Certainty Could Boost US Economic Growth in 2026 – But There’s a Catch

Banking giant Goldman Sachs believes that the US economy is primed to exceed consensus expectations this year.

In its Forecast for the World’s Biggest Economies in 2026 report, Goldman Sachs Research predicts that real GDP will grow 2.8% this year, well above the consensus estimate of just 2.2%.

The team, led by chief US economist David Mericle, sees two tailwinds driving America’s economic expansion in 2026.

“The key driver is that the drag from tariff increases should give way to a boost from business and personal tax cuts included in the One Big Beautiful Bill Act.”

Mericle also says that real wage gains and rising wealth should help sustain spending growth, while “new tax incentives, easier financial conditions and reduced policy uncertainty should boost business investment.”

On top of solid economic growth, Goldman Sachs Research believes inflation will continue to cool this year.

“The US economics team estimates that core personal consumption expenditures inflation will fall from 3% in 2025 to 2.2% in December 2026 as the impact of tariffs fades.”

But Mericle warns that the labor market has been shaky, calling it a “key risk” factor this year.

“Our strongest conviction views for 2026 are our above-consensus GDP growth forecast and our below-consensus inflation forecast. The outlook for the labor market is more uncertain—we expect it to stabilize but see the possibility of further softening as the key risk for 2026.”

Generated Image: Midjourney