The podcast provides an economic outlook for 2026 and 2027, contrasting it with 2025. While 2025 saw slower growth and stubborn inflation, 2026 is projected to bring modest global growth acceleration, easing inflation in the second half, and improved real incomes, with the U.S. expected to lead. The U.S. economy is anticipated to move past high uncertainty, with 1.8% growth in 2026 and 2% in 2027. Inflation is expected to cool but remain above the Fed's 2% target, with headline PCE at 2.5% and core inflation at 2.6% by the end of 2026. The labor market is described as "low-hire, low-fire," with unemployment peaking at 4.7% in Q2 2026. The Fed is expected to cut rates to insure against labor market weakness, potentially leading to inflation staying above target longer. AI is identified as a significant growth driver, contributing to productivity gains despite import dilution. Risks include demand upside leading to higher inflation, productivity upside with lower rates, or a mild recession if tariffs and tight policy bite harder.
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