5 Reasons for Optimism About the U.S. Economy in 2026

SadaNews - A year ago, companies, especially their executives, were optimistic about the U.S. economy in 2025, anticipating tax cuts and market-friendly policies from elected President Donald Trump. Then came April 2, Liberation Day.

On that day, markets retreated, uncertainty escalated, and affordability became a major concern. Meanwhile, the job market continued to decline, as immigration restrictions slowed workforce growth and created labor shortages in certain sectors.

Yet, the U.S. economy withstood the challenges. As the year drew to a close, the markets rose by more than 15%, and GDP growth in the third quarter reached 4.3%, a surprisingly strong rate. What will 2026 look like? There are reasons for optimism, as there were a year ago, and here are five of them.

Consumers Will Have More Money

Consumers will have more money. Treasury Secretary Scott Pisonte stated that Americans are expected to receive up to $150 billion through tax refunds early next year as a result of the budget law signed by the president last summer.

High-income earners, who spend a smaller percentage of their income, will feel a greater impact, with a notable exception for those earning tips. However, the Congressional Budget Office anticipates that tax cuts will boost demand and supply in the job market next year.

Trump also stated that he would send $2,000 checks to most families next year to alleviate their cost-of-living concerns. This statement should be taken cautiously, but the overall trend in tax policy is towards increased spending and bolstering consumer confidence.

More Money for Businesses

Businesses will have more money. Another provision in the budget law allows companies to deduct 100% of their equipment purchases in the year they spend the money.

Evidence suggests that a similar rule, along with corporate tax cuts, boosted investment by 11% and GDP by nearly 1% following the passage of the 2017 tax law. However, the proportion of spending that companies were allowed to deduct has decreased since the original law was enacted, and there has been uncertainty about its future value.

The new provision is expected to contribute to increased capital spending and growth next year and beyond.

Lower Interest Rates

Interest rates will decline, and it remains unclear if Federal Reserve Chairman Jerome Powell will take further cuts, but it is almost certain that the new Fed chair, who will take office in May, will do so. It is also likely that the central bank will increase its purchases of treasury bonds, alleviating credit concerns.

Energy Could Become Cheaper

Energy may become cheaper. The Congressional Budget Office projects that tax provisions encouraging increased oil and gas production will have a positive effect on GDP next year. The office estimates that this impact will be greater in the coming years because some regulations are temporary, but it is not unlikely that increased energy supply will lower its cost.

A Victory of Hope Over Experience

There will be more certainty about tariffs. This might be a victory of hope over experience. However, it will be difficult to see less political stability than we have witnessed this year. The high tariffs announced on Liberation Day did not only shock the markets, but the ongoing uncertainty about their nature and scope has caused economic damage and may have contributed to rising inflation. Now that agreements are coming into effect, the question of their legitimacy will be settled definitively.

Despite all this, there are reasons for optimism about 2026. It is expected that the budget law alone will contribute to raising GDP by 0.9% next year.

Concerns Over a Temporary Recovery in 2026

However, beyond 2026, there are concerns: this economic stimulus could lead to a temporary recovery, and America has learned during the pandemic how dangerous such recoveries can be. Tax relief checks, tax cuts, and lower interest rates all indicate the potential return of high inflation, which would severely harm American families and could entrench inflation further by destabilizing expectations.

It may take years for the Federal Reserve to regain its credibility and ability to influence the inflation rate. There is also the issue of the growing national debt, which this law will contribute to. This, in turn, will raise long-term interest rates, which may ultimately burden consumer spending. But these are issues left for another article.