US leadership
There are three structural and three cyclical reasons why we believe the US will be the fastest growing advanced economy in 2026.
The three structural factors are:
- Economic resilience. Since the pandemic the US economy has demonstrated a high degree of economic resilience, performing better than other advanced economies. While some recession indicators have prompted concerns about a deterioration in the US economy, these have so far proved unfounded. This may be connected to the large amount of stimulus that was applied during the Covid period, coupled with the highly flexible, adaptable and innovative nature of the US corporate sector.
- A clear growth plan. Scott Bessent, the US Treasury Secretary has set out a clear plan for delivering economic growth – “3-3-3”1 – 3% real growth, 3% budget deficit (relative to GDP), and an increase in oil production of 3 million barrels per day. Key to the success of these three targets, respectively, are deregulation and pro-business reforms; spending cuts and revenue increases; and simplification of permits to increase oil supply and reduce costs (see Theme 5). Whether these objectives can be achieved by these measures alone is yet to be seen, but at least the US has a plan, in contrast with much of the rest of the world.
- IT leadership. The US remains at the forefront of global IT innovation and development largely due to the considerable investment in research and development that has already taken place. In the first half of 2025, private sector investment in IT equipment contributed almost half the growth in GDP.2 Already-announced plans by the largest IT companies strongly suggest this large contribution will continue to at least 2030. This will, most notably, include investment in data centres and energy provision which is set to continue to be a battle ground in the global race for IT supremacy (see Theme 6).
The three cyclical factors are:
- Lower rate environment. We anticipate that we will reach trough rates in the first half of 2026 (see Theme 2). Given the lag between monetary policy and activity, lower rates will have an increasingly positive effect on economic growth as the year progresses, in particular supporting consumer spending.
- Lower energy prices. 2025 saw much talk about tariffs resulting in slower growth and higher inflation. However, that has not materialised. One reason is that energy prices have been in decline, something that works in exactly the opposite direction to tariffs, supporting growth and lowering inflation. Furthermore, lower energy prices are expected to continue to benefit the US economy at least in the first half of 2026 and potentially into the second half if they remain depressed.
- Fiscal stimulus. President Trump’s much touted One Big Beautiful Bill Act contains a number of measures that will be growth positive. Of note, growth will be well supported next year by accelerated depreciation, the ability of companies to fully expense research and development costs in the year in which they occur and an increase in individual tax deductions. The Tax Foundation estimates that this will increase US GDP by about 1% in 2026 relative to what it would otherwise have been.3