With the worst-case scenario for global trade conflict avoided and strong equity markets helping to offset other sources of economic weakness, Wall Street has a rosier forecast for the U.S. economy — however, economists are still cautious on the outlook for stocks, according to the U.S. Securities Industry and Financial Markets Association’s (SIFMA) latest semiannual survey.
The industry trade group published the results of its survey of the chief U.S. economists from over 20 global and regional financial institutions, which finds that the median forecast for economic growth this year is now 1.8%, up from 0.9% in its mid-year survey. The median forecast for 2026 is now up to 2.2% from the prior call of 1.9%.
“The U.S. economic and inflation outlook has improved since our last Economist Roundtable survey, with one-third of participants noting an improved 2026 outlook and recession concerns moderating,” said Scott Anderson, co-chair of the SIFMA Economist Roundtable and chief U.S. economist and managing director at BMO, in a release.
“A series of trade agreements that lowered the average effective U.S. tariff rate, the absence of retaliation from trading partners and the continued lift from the AI investment boom and rising equity prices collectively helped blunt the worst-case tariff impacts on spending, inflation and investment, playing a notable role in this year’s economic outperformance,” Anderson said.
On inflation, the survey found that the latest forecasts for annual core inflation are modestly lower than the mid-year survey, with core CPI seen coming in at 3.1% this year, easing to 2.8% by the end of 2026.
Despite inflation remaining above the target level for the U.S. Federal Reserve Board, the survey also anticipates one more rate cut this year, and more than half of respondents (58%) expect two further cuts in 2026, SIFMA said.
“Looking ahead to next year, tariff effects are expected to fade into the background as domestic demand and labour-market slack become more important drivers of price pressures,” Anderson said — adding that economists remain cautious about future market performance, “with more than half of participants anticipating a 10% or greater equity market correction and almost a quarter seeing the possibility of a 20% or greater decline by the end of 2026.”
Survey respondents also indicated that possible upside risks to growth include lower tariffs, stronger productivity gains and robust consumer spending, SIFMA noted. Meanwhile, a drop in equity markets, rising inflation and a weaker labour market were all cited as potential downside risks to the outlook.