Goldman Sachs has released its 2026 Economic and Financial Market Outlook, placing a strong emphasis on the resilience of the US economy in the face of persistent internal and external challenges. The report, which reflects 18 years of annual analyses, highlights a steadfast commitment to US equities despite the recent market tumult witnessed in 2025.
"Our long-standing recommendations of overweighting US equities and staying invested, despite periodic turbulence, have served our clients well over the past 16 years," said Goldman Sachs in their report. However, many clients are now contemplating if it’s time to diversify their portfolios and lessen their exposure to US stocks in favor of other developing markets. The 2025 turmoil, driven by factors such as US tariffs, a substantial budget deficit, rising debt-to-GDP levels, and escalating geopolitical tensions with China, has left a tangible mark on investor sentiment.
The market volatility of the previous year resulted in a significant 9% decline in the US dollar, leading to outperformance of financial markets outside the country. This has resurfaced concerns about the fading of “US exceptionalism,” a term often used to describe the United States' unique global role. "We explain in this year’s Outlook why we expect them to be proven wrong yet again," stated the firm.
In Section I of their report, Goldman Sachs delves into the key elements that affirm US preeminence, arguing that the elements that uphold the nation's standing—economic strength, human capital, and robust financial markets—remain largely unaffected by the upheaval of 2025. "US Preeminence endures thanks to the country’s unparalleled economic, human capital, and financial market strengths," emphasized the report.
The report addresses several perceived vulnerabilities such as the US's reliance on China for vital supply chains and the rising debt-to-GDP ratio. They noted, "While reliance on China for key inputs is a real vulnerability, we argue that the US remains far from the tipping point of unsustainable debt-to-GDP levels."
Moreover, the paper also entertains discussions on the health of US equities, evaluating whether a market bubble exists. The presence of artificial intelligence's influence on the economy was recognized, yet the firm clarified that it is not the sole driver of US corporate growth or stock performance. Enhancing their investment recommendations, Goldman Sachs expressed that investors should refrain from using gold or bitcoin as portfolio hedges, suggesting that traditional equities are still the better option.
Continuing from this analysis, the report reaffirms the rationale behind a continued overweight in US equities. "The faster and more reliable earnings growth potential of US companies, relative to global peers, leads us to retain our recommendation to clients," said Goldman Sachs, reiterating their confidence in the US markets.
The report provides anticipated total returns for significant asset classes along with insights into currency valuations and tactical adjustments entering into 2026. Section II shifts focus to economic forecasts for other developed and emerging markets, while Section III presents an overview of financial conditions in these global economies and their interaction with the dollar and commodities.
The comprehensive outlook integrates diverse insights and experiences from sector professionals, reflecting a range of perspectives and the complex economic landscape. "Preparing it has been a herculean but very rewarding undertaking," Goldman Sachs noted, highlighting the collaborative effort behind the findings.
In conclusion, the firm maintains its stance on US preeminence and the strategy of staying invested in equities. They express hope that readers of the report will share their optimism. The outlook affirms the belief that while challenges persist, the foundation of the US economy remains strong and robust, setting a positive tone for investors looking ahead to 2026.