The U.S. economy continues to show resilience, supported by easing monetary policy and strong market performance, even as inflation and employment trends signal underlying strain. Crawford expects moderate growth in 2026, but notes that high valuations, affordability pressures, and a weakening labor backdrop will test markets. AI-driven investment remains a key tailwind, offering productivity gains that could help sustain earnings. Together, these forces point to a year of opportunity but with rising risks beneath the surface.
The Fed’s latest projections are optimistic for 2026
Stronger Gross Domestic Product (GDP) growth – 2.3%
Lower unemployment – 4.4%
Lower inflation – 2.4% PCE
Lower short-term interest rates – 3.5%
If these projections materialize, it should be favorable for investors. However:
Lower long-term interest rates may be limited by concerns over growing government debt.
Stocks will be challenged by lofty valuations. Continued earnings growth and profit margin expansion will be required for further gains.
“Uncertainty” may be less in 2026. “Affordability” likely not.
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