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.