After months of warnings about looming economic instability, 2026 could offer an unexpected upside.
A growing number of analysts believe the coming year is shaping up to deliver a stronger-than-anticipated rebound—one that Americans may actually notice in their paychecks and investment accounts.
Treasury Secretary Scott Bessent expressed that confidence last month on Fox Business, saying, “I think 2026 is going to be a gangbuster year, and Americans will feel it in their pocketbooks, in their homes, and they will know the economy is strong, that they are doing well.”
While optimism from a Trump administration official may not surprise everyone, similar views are increasingly being echoed across the broader financial sector.
Investment bank Piper Sandler estimates that the structure of the One Big Beautiful Bill Act—combining retroactive and forward-looking tax cuts on 2025 income—could inject roughly $191 billion into the economy, according to The Economist. That boost could add about 0.3 percentage points to GDP, raising projected 2025 growth to roughly 1.9%.
Recent data also point to momentum. The Bureau of Economic Analysis reported that its first estimate of third-quarter 2025 GDP showed annualized growth of 4.3%, following a 3.8% increase in the previous quarter. The gains were driven largely by consumer spending, exports, and government spending, partially offset by weaker investment. Although tariffs reduced imports—which mathematically subtracts from GDP—the net effect still supported growth.
The Economist highlighted another unconventional factor: weaker federal tax enforcement. Adam Posen, president of the Peterson Institute for International Economics, suggested that increased tax evasion could effectively add 0.25% or more to GDP, based on historical patterns.
Monetary policy could further amplify the upswing. President Trump is expected to appoint a successor to Federal Reserve Chair Jerome Powell at the end of Powell’s term, likely someone more inclined toward interest-rate cuts. If Trump also succeeds in legal efforts to remove Governor Lisa Cook and potentially other Fed officials, the central bank could shift even more decisively toward looser policy.
According to The Economist, “Such a move could lower the risk of a stock market crash—the most obvious threat to the economy.”
As long as the AI-driven stock rally continues, the magazine noted, economic growth may remain on solid footing. Even the Federal Reserve’s own December projections reflected rising optimism, with expected growth revised upward to a 2.1%–2.5% range from September’s 1.7%–2.1%.
In short, while risks remain, the outlook for 2026 may be brighter than many anticipated—and perhaps even better than a return to normal.
Source: GlobeSt
