Download Geneva's Economic & Investment Outlook

The U.S. economy should continue growing, but renewed inflation, uneven household resilience and tighter monetary policy are increasing downside risks.

• Real GDP growth slowed from 2.1% annualized in Q1 to 1.5% in Q2 2026, while real final sales to private domestic purchasers rose 4.2%; Atlanta Fed GDPNow remained above 3% for Q3 at the end of September.
• Consumer spending was still growing at approximately 2% year on year despite weak sentiment, but resilience increasingly depended on wealthier households; data from more than 20 million JPMorgan customers showed that investment-account transfers funded 6.8% of spending in April 2026, versus 3.5% in 2019.
• Household and labor-market conditions were becoming more uneven, with younger workers and white-collar employees lagging, while healthcare, services and construction benefited from data-center investment.
• Inflation exceeded wage growth from April onward: August average hourly earnings rose 3.1% year on year against 3.4% headline inflation, while headline CPI reached 3.4%; the authors retain forecasts of 3.4% CPI inflation for 2026 and 3.0% for 2027, above the 2.4% 2027 consensus.
• Manufacturing remained in expansion for eight consecutive months, and AI infrastructure continued to support investment, but the scale of off-balance-sheet hyperscaler commitments raised concerns about crowding out non-AI projects; the 2027 nonresidential fixed-investment forecast was reduced from 4.5% to 4.0%.

Takeaway: The base case remains 2.0% real GDP growth in both 2026 and 2027 with a measured Fed tightening cycle, but investors should expect elevated rates, a 5.25% 10-year Treasury yield and a 5.50% 30-year yield at year-end 2026, alongside greater vulnerability if financial markets weaken or inflation persists.