Market Sentiment Wall Street firms remain largely bullish for 2026. Yet the unusual economic backdrop, AI-driven growth amid weak job creation, adds caution to forecasts
AI and Productivity AI investment is surging, boosting output without major hiring. Slower immigration and a tighter labor supply further limit employment growth despite modest productivity gains
Corporate Spending and Wealth Effect Capex is set to continue, largely funded by corporate cash flows, while rising markets and lower rates may create a “wealth effect” that supports consumption despite slower income growth
Economic Forecasts and Risks JPMorgan projects 2% U.S. growth and 2.9% global growth in 2026–27. Yet inflation, tariffs, and political pressures may limit Fed rate cuts, keeping the outlook “bullish with hedges
Investor Takeaways AI boosts profits but may suppress hiring, creating uncertainty for household incomes. Diversification across Europe, Japan, and China is advised as U.S. tech valuations reach high levels