Chart of the Week

As headlines continue to create noise around lingering policy uncertainties, we are focusing on key, durable trends already in place that we believe will drive the economy and capital markets in 2026. We see four dynamics powering U.S. economic growth, including lower short-term interest rates; cumulative cost savings from deregulation; the ripple effects of artificial intelligence related investment broadening and expanding across end-user sectors; and greater 2026 tax refunds.

Regarding tax refunds, we expect large cash infusions during tax season to reignite broad consumer spending. As the chart shows, 2026 tax refunds are projected to be $517 billion, notably exceeding the 2017 – 2025 average of $360 billion (excluding coronavirus-related stimulus). We expect the nearly 44% year-over-year increase to meaningfully boost consumer spending and help the U.S. economy gather renewed momentum in 2026.

We view the U.S. economy as the engine of global economic expansion in 2026. That leadership should help stabilize the U.S. dollar’s value and provide some modest appreciation by year-end. We also expect a comparatively favorable U.S. economic outlook to drive U.S. financial-market outperformance compared with overseas markets. For more on our expectations and highest-conviction investment ideas, see our 2026 Outlook, “Trendlines over headlines.”

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