AI, supply chains, and trade resets: The global economy in 2026

Jan Hatzius, Chief Economist at Goldman Sachs, joins Josh Lipsky at the Atlantic Council to discuss the global economic outlook for 2026. Hatzius forecasts a stronger-than-consensus 2.6% U.S. GDP growth driven by easing tariffs, fiscal stimulus from tax cuts, and the lagged effects of Fed rate cuts, while dismissing AI investment as a significant GDP driver due to import offsets. He anticipates U.S. inflation to fall to around 2.1% by year-end, allowing for two more Fed rate cuts. China's export-led growth strategy is expected to continue, creating global imbalances, while Europe faces headwinds, particularly Germany, despite fiscal expansion and Southern European strength. Hatzius identifies the potential for a larger-than-expected increase in the U.S. unemployment rate, driven by efficiency gains and AI-related layoffs, as a key risk to monitor.

Outlines

Part 1: 2025 Review and 2026 U.S. Outlook

Part 2: China and Global Imbalances

Part 3: Regional Outlooks and Central Banking

Part 4: Risks and Future Outlook

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AtlanticCouncil

Part 1: 2025 Review and 2026 U.S. Outlook

2025 Economic Review: Tariffs, Tailwinds, and Global Resilience

2026 U.S. Economic Outlook: Growth Drivers, AI Impact, and Fiscal Policy

Inflation Forecast: Labor Market, Tariffs, and Fed Rate Cut Implications

Productivity, Debt, and Deficits: Pressures on the U.S. Fiscal Position

Part 2: China and Global Imbalances

Global Economic Outlook: China's Export-Driven Growth and Property Market Weakness

Global Imbalances: China's Current Account Surplus and European Economic Pressures

Part 3: Regional Outlooks and Central Banking

European Central Bank, Bank of England, and Inflation Outlook

Emerging Markets: India's Structural Growth, East Asia's AI Boost, and Currency Valuations

RMB Undervaluation, Central Bank Independence, and Global Economic Outcomes

Part 4: Risks and Future Outlook

Black Swan Event: Unemployment, AI, and Negative Feedback Loops

AI, supply chains, and trade resets: The global economy in 2026

AtlanticCouncil

Part 1: 2025 Review and 2026 U.S. Outlook

00:012025 Economic Review: Tariffs, Tailwinds, and Global Resilience

2025 Economic Review: Tariffs, Tailwinds, and Global Resilience

01:232026 U.S. Economic Outlook: Growth Drivers, AI Impact, and Fiscal Policy

2026 U.S. Economic Outlook: Growth Drivers, AI Impact, and Fiscal Policy

09:59Inflation Forecast: Labor Market, Tariffs, and Fed Rate Cut Implications

Inflation Forecast: Labor Market, Tariffs, and Fed Rate Cut Implications

14:15Productivity, Debt, and Deficits: Pressures on the U.S. Fiscal Position

Productivity, Debt, and Deficits: Pressures on the U.S. Fiscal Position

Part 2: China and Global Imbalances

19:26Global Economic Outlook: China's Export-Driven Growth and Property Market Weakness

Global Economic Outlook: China's Export-Driven Growth and Property Market Weakness

25:00Global Imbalances: China's Current Account Surplus and European Economic Pressures

Global Imbalances: China's Current Account Surplus and European Economic Pressures

Part 3: Regional Outlooks and Central Banking

30:17European Central Bank, Bank of England, and Inflation Outlook

European Central Bank, Bank of England, and Inflation Outlook

34:11Emerging Markets: India's Structural Growth, East Asia's AI Boost, and Currency Valuations

Emerging Markets: India's Structural Growth, East Asia's AI Boost, and Currency Valuations

39:31RMB Undervaluation, Central Bank Independence, and Global Economic Outcomes

RMB Undervaluation, Central Bank Independence, and Global Economic Outcomes

Part 4: Risks and Future Outlook

43:21Black Swan Event: Unemployment, AI, and Negative Feedback Loops

Black Swan Event: Unemployment, AI, and Negative Feedback Loops