Goldman Sachs resets bets on US economy in 2026

Core Insights - The U.S. economy in 2025 is characterized by GDP growth despite rising inflation and unemployment [4] - The Federal Reserve's monetary policy decisions are crucial for economic growth or contraction, influenced by its dual mandate [5] - Goldman Sachs is recognized for its insights into economic trends, particularly regarding the U.S. economy's outlook for 2026 [3] Economic Conditions - The Federal Reserve cut rates three times in 2024 but maintained them until September 2025 due to inflation concerns stemming from tariff strategies [5][6] - Unemployment rose to 4.6% in November 2025, up from 4% in January of the same year [6] - Layoffs surged to 1.17 million through November 2025, representing a 54% increase from the same period in 2024 [8] Federal Reserve Actions - The Federal Open Market Committee, consisting of 12 rotating Fed officials, is responsible for rate adjustments based on conflicting economic goals [5] - Fed Chair Powell faced criticism for his hesitancy to lower rates earlier in 2025, which may lead to his replacement when his term expires in May [7][8] - The Fed's decisions are pivotal during a challenging economic period, with tariffs contributing to higher inflation [8]