Economic Overview - The U.S. economy is described as "K-shaped," where wealthier Americans benefit from a strong stock market, while poorer consumers face challenges due to a weak labor market and high inflation [1] - Consumer spending, which constitutes about 70% of U.S. GDP, is at risk of declining, potentially leading to a sharp deceleration in economic growth by 2026 [2] Investment Opportunities - The Schwab US Dividend Equity ETF (SCHD) may outperform the stock market significantly if negative economic scenarios unfold, as it offers a sizeable dividend yield that could attract investors during market downturns [2] - SCHD's large investments in sectors such as energy, healthcare, and industrials position it well for strong performance in 2026, regardless of broader market conditions [3] ETF Holdings - Nearly 37% of SCHD's holdings are in consumer defensive or healthcare stocks, which are typically resilient during economic downturns [4] - Key holdings include major pharmaceutical companies like AbbVie, Amgen, Pfizer, and Bristol Myers, as well as consumer staples like Coca-Cola and PepsiCo [4] Interest Rate Impact - Economic downturns often lead the Federal Reserve to lower interest rates, which could further benefit SCHD, especially if rates drop significantly [5] - The potential nomination of a Fed chair who supports aggressive rate cuts could enhance SCHD's attractiveness due to its 3.73% dividend yield [5]