Podcast Summary: Goldman Sachs Exchanges – Outlook 2026 Episode 1: The Big Picture

Date: January 13, 2026
Host: Alison Nathan
Guests: Jan (likely Jan Hatzius, Head of Goldman Sachs Research & Chief Economist), Dominic Wilson (Senior Advisor, Global Markets Research Group)

Overview:

This opening episode of a three-part series explores the macroeconomic and market outlook for 2026. Host Alison Nathan interviews Jan Hatzius and Dominic Wilson about their recent macro outlook, titled "Sturdy Growth, Stagnant Jobs, Stable Prices." They discuss why Goldman Sachs is more optimistic than consensus on global growth, break down prospects for major regions, analyze market sentiment, and weigh risks—particularly in labor markets and asset prices.

Key Discussion Points & Insights

1. Optimistic Global Growth Forecast for 2026

Speaker: Jan Hatzius

• The 2025 forecast largely came true, despite episodic volatility.
• In 2026, the growth picture is "clearer"—major trade tensions (especially tariffs) are largely behind us.
• Fiscal tailwinds are significant:
  • U.S.: Tax cuts (from the "One Big Beautiful Bill Act"), robust refunds, and full depreciation for business investment.
  • Germany: Fiscal easing, visible in both defense orders and infrastructure spending.
• Central bank rate cuts and easier financial conditions are supportive.
• Quote:

  "It actually seems like a clearer story in 2026 than in 2025, where you had to trade off these pros and cons for growth." (03:11)

U.S. Specifics:

• GS forecasts 2.5% US growth (YoY Q4/Q4).
• Growth driven by fiscal support, ongoing monetary easing, and a labor market with rising productivity—unemployment remains stable around 4.5%.
• Quote:

  "We're probably going to see a boost from the rate cuts that the Fed has already delivered... The unemployment rate [will] go sideways at about four and a half percent because we've seen this pickup in productivity growth." (03:40)

2. Market Perspective & Growth Upside

Speaker: Dominic Wilson

• Markets have recovered from tariff/growth worries, but in GS's view, remain too cautious.
• Market pricing (~2% US growth) leaves room for upgrades, particularly in the first half of 2026.
• Quote:

  "The 2.5% through the year growth forecast that Jan says would imply that the market has room to get more optimistic." (04:36)

3. China’s Surging External Imbalance

Speaker: Jan Hatzius

• China’s growth remains above consensus, thanks to robust exports offsetting domestic weakness, especially housing.
• Forecast: China’s current account surplus could reach 1% of global GDP—the largest ever for any country.
• The imbalance will negatively affect major trading partners, especially Europe.
• Quote:

  "The current account surplus... is going to grow to about 1% of global GDP, which would be the biggest number for any economy in recorded history." (06:06)

4. Europe’s Mixed Outlook

Speaker: Jan Hatzius

• Growth headwinds from China’s surplus, especially for Germany’s industrial sector.
• Yet, shorter-term: German fiscal stimulus and strong performance from countries like Spain support moderate optimism (forecast: 1.3% euro area growth).
• Longer term, challenges remain for the region’s industrial competitivity and external balances.

5. FX Markets & Dollar Trend

Speaker: Dominic Wilson

• 2025 saw front-loaded dollar weakness; 2026 is likely a continuation but less pronounced.
• Fed expected to cut more than peers, keeping mild downside pressure on USD.
• However, focus may increasingly shift to outperformance in cyclical assets and currencies.
• Quote:

  "Maybe a modest dollar decline story... but it may not be the major focus for FX markets that it was for quite a lot of 2025." (09:17)

6. Stagnant Labor Markets Amid Resilient Growth

Speaker: Jan Hatzius

• Labor market not keeping pace with output growth—rising productivity the main explanation.
• Unemployment up while GDP solid, due to productivity increase (1.5% pre-pandemic, 2%+ now; AI could push further to 2.5%).
• AI effects on jobs haven't really materialized yet, and productivity data do not show significant impact from AI investment so far.
• Quote:

  "It is... striking that the US Unemployment rate has been rising in an environment where the GDP numbers have been very solid and that speaks to stronger productivity growth." (10:24)
  "AI investment didn't affect US GDP growth in 2025 to any measurable degree." (12:10)

7. AI and Its True Economic Impact

• Most AI investment has been in imported goods, so its impact is felt mostly in producer countries (e.g., Taiwan, Korea).
• Measurement issues with semiconductors means much of this investment doesn’t reflect as GDP growth in US data.
• Firms are in early stages of incorporating AI—labor market effects expected later.

8. Disinflation in Developed Markets

Speaker: Jan Hatzius

• Inflation is cooling, especially in the US and UK, driven by loosening labor markets and falling rent inflation.
• GS is “confident” that inflation will reach central bank targets by year-end.
• Quote:

  "I have a lot of confidence that we'll see further deceleration... we can get close to central bank inflation targets by the end of the year." (14:20)

9. Monetary Policy Outlook

• Fed and Bank of England expected to cut rates further in 2026, but timing depends on near-term data.
• GS projects US rates down to roughly 3% by year-end.
• In Japan, rates expected to rise modestly (total +50bps over 12 months).

10. Risk Assets: Another Strong Year for Equities?

Speaker: Dominic Wilson

• A “third year” of positive returns is likely, but probably with lower returns and higher volatility.
• Double-digit equity returns expected, led by the macro backdrop.
• Valuations, especially in the US, are rich—makes market more sensitive to negative trends.
• AI-driven equities have much optimism already priced in, possibly leading to greater volatility as the AI story evolves.
• Quote:

  "The return profile feels like it's been very good, but it's a little lower each year as we go through this bull market." (16:10)

• Maintaining exposure to equities is key, but beware overexposure to areas with inflated optimism or increased risk.

11. Credit Markets: Diminishing Appeal

• Credit’s risk-reward is less favorable now: spreads are tight, upside is limited, and new debt is increasingly funding the AI/data center boom.
• “Supply risk” from corporate debt issuance could pressure spreads, as seen in prior booms.
• Quote:

  "The risk reward profile in credit markets overall is lower than equities... there is a risk that that boost of supply, it starts to mirror some of the dynamics we saw in the late 90s." (18:32)

Key Risks & Potential Downturns

12. Top Downside Risks

Speaker: Jan Hatzius

• Most urgent risk: further deterioration in labor markets leading to rising unemployment (“SAHM rule” scenario = recession trigger).
• Weak labor market confounds consumer sentiment and could spur a negative feedback loop.
• Quote:

  "At the top of the list and the most immediate is more deterioration in the labor market... you could get a cycle and feedback loop... and a downturn in the macro economy." (19:11)

Speaker: Dominic Wilson

• Markets are almost ignoring recession risk, so a material labor deterioration would prompt sharp repricing (equities down, credit spreads wider, increased rate cut expectations).
• Secondary risk: “Fiscal risks” may re-emerge if growth is strong, particularly if inflation moderation hasn't fully resolved.

Notable Quotes

| Speaker | Quote | Timestamp | |---------|-------|-----------| | Jan | "It actually seems like a clearer story in 2026 than in 2025, where you had to trade off these pros and cons for growth." | 03:11 | | Jan | "We're probably going to see a boost from the rate cuts that the Fed has already delivered... The unemployment rate [will] go sideways at about four and a half percent because we've seen this pickup in productivity growth." | 03:40 | | Dom | "The 2.5% through the year growth forecast that Jan says would imply that the market has room to get more optimistic." | 04:36 | | Jan | "The current account surplus... is going to grow to about 1% of global GDP, which would be the biggest number for any economy in recorded history." | 06:06 | | Jan | "It is... striking that the US Unemployment rate has been rising in an environment where the GDP numbers have been very solid and that speaks to stronger productivity growth." | 10:24 | | Jan | "AI investment didn't affect US GDP growth in 2025 to any measurable degree." | 12:10 | | Jan | "I have a lot of confidence that we'll see further deceleration... we can get close to central bank inflation targets by the end of the year." | 14:20 | | Dom | "The return profile feels like it's been very good, but it's a little lower each year as we go through this bull market." | 16:10 | | Jan | "At the top of the list and the most immediate is more deterioration in the labor market... you could get a cycle and feedback loop... and a downturn in the macro economy." | 19:11 |

Timestamps for Key Segments

• 00:54 – 02:36: 2026 global and U.S. growth outlook
• 04:04 – 04:58: Market expectations vs. Goldman Sachs forecast
• 05:01 – 06:34: China’s current account surplus & implications
• 06:35 – 08:01: Europe’s economic setup; effect of China
• 08:32 – 09:32: FX and the U.S. dollar outlook
• 09:32 – 11:44: Labor markets, productivity, and AI
• 13:27 – 14:48: Disinflation & central bank outlook
• 15:53 – 17:44: Outlook for equities and credit markets
• 18:57 – 22:10: Risks and what could go wrong

Takeaways for Investors

• Expect continued solid global growth—especially in the U.S.—buoyed by fiscal stimulus and looser financial conditions.
• Labor markets will remain stagnant due to high productivity, so don’t expect a hiring boom.
• AI’s economic impact is not in the numbers yet; most benefits are still to come.
• Risk assets (equities) may have room for further growth, but watch for elevated volatility and rich valuations, especially in the U.S.
• Credit offers less upside; caution warranted as debt-funded investment booms.
• Watch labor market weakness as a leading risk factor for recession and market correction.
• Inflation and rates should trend lower, but the pace will depend on economic data—especially in the U.S. and U.K.
• Stay mindful of latent fiscal risks if global growth outperforms, especially if inflation stays above target early in the year.

For Part 2, the series will zoom in on the U.S., Asia, and Europe in more detail.