Market volatility, uncertainty around the path of interest rates, and an evolving geopolitical landscape remain top of mind for investors as the US economy and equity markets continue to show remarkable resilience year-to-date.
In this year's report, we recap market news from the summer and share our forward-looking perspectives for investors, business leaders, and executives. We also address key client questions regarding US debt, the bond market, equity market concentration, and the impact of artificial intelligence on the labor market and businesses.
Key Takeaways
Highlights from the Summer
Investors balanced a range of concerns over the summer, such as geopolitical tensions and hyperscaler capital expenditures (capex) on AI. Equity market volatility reflected these concerns.
Though Fed Chair Kevin Warsh acknowledged inflation readings were better than expected, he stressed the underlying trends have not meaningfully improved. Taking into account this year's inflationary pressures, the latest interest rate hike at the September Federal Open Market Committee (FOMC) meeting, and hawkish commentary from the Fed, ISG now expects one more hike at the December meeting before remaining on hold through 2027.
A Resilient US Economy
Despite a deceleration in second-quarter GDP growth and persistent above-target inflation, the US economy remains resilient due to robust consumer spending and business investment.
ISG has slightly lowered their GDP growth forecast to 2.2% and increased their forecast for inflation after examining year-to-date US economic data and the impact of the war in Iran.
Earnings Strength and Positive US Equities Outlook
Since January 2026, ISG has increased their S&P 500 total return forecast for the year—driven by better-than-expected earnings growth in the first half of the year. ISG expects the market is likely to end the year between their good case (8300) and central case (7500-7600) S&P 500 price level scenarios. ISG’s positive outlook on US equities and their recommendation to stay invested continues to be anchored by the fundamental strength of the US economy and corporate earnings.
AI’s Impact on Growth and Labor
While many US jobs are exposed to automation, ISG believes concerns of AI triggering a sharp deterioration in the labor market have not materialized. Historically, worker displacement from automation is often offset by the creation of new roles over time.
September 2026
Investment Strategy Group (“ISG”). The Investment Strategy Group, part of the Asset and Wealth Management business (“AWM”) of Goldman Sachs (“GS”), focuses on asset allocation strategy formation and market analysis for GS Wealth Management. Any information that references ISG, including their model portfolios, represents the views of ISG, is not financial research and is not a product of GS Global Investment Research (“GIR”) and may vary significantly from views expressed by individual portfolio management teams within AWM, or other groups at GS.
ISG/GIR Forecasts. Economic and market forecasts presented (“forecasts”) generally reflect either ISG’s or GIR’s views and are subject to change without notice. Forecasts do not consider investment objectives, restrictions, tax and financial situations or other needs of any specific client. Forecasts are subject to high levels of uncertainty that may affect actual performance and represents only one of a broad range of possible outcomes. Forecasts and any return expectations are as of the date of this material, and do not project returns of any given investment or strategy. Forecasts are estimated, based on capital market assumptions, and are subject to significant revision and may change materially as economic and market conditions change. Any case studies and examples are for illustrative purposes only. If applicable, a copy of the GIR Report used for GIR forecasts is available upon request. Forecasts do not reflect advisory fees, transaction costs, and other expenses a client would have paid, which would reduce return.
Advisory services offered by Goldman Sachs Wealth Services, L.P. (the “Adviser”), a registered investment adviser, affiliate of Goldman Sachs & Co. LLC ("GS&Co."), and a subsidiary of The Goldman Sachs Group, Inc., a worldwide, full-service investment banking, broker-dealer, asset management, and financial services organization. Goldman Sachs Ayco is a brand of Goldman Sachs Wealth Services, L.P. Brokerage services are offered through GS&Co. and Mercer Allied Company, L.P. (a limited purpose broker-dealer), both affiliates of the Adviser and members FINRA/SIPC.
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