Goldman's Hatzius and Snider on the Outlook for 2026

What It Covers

Goldman Sachs chief economist Jan Hatzius and equity strategist Ben Snider forecast 2026 economic outlook with 2.6% GDP growth, flat 4.5% unemployment, S&P target of 7,600, and debate AI's actual economic impact versus market expectations.

Key Questions Answered

• •AI GDP Contribution: AI infrastructure spending contributes nearly zero to measured GDP growth because goods are largely imported and semiconductors count as intermediate inputs, not investment, despite widespread claims of 50% contribution to economic growth in 2025.
• •Productivity Without Job Growth: Accelerating productivity growth at 2% annually allows 2.6% GDP expansion while unemployment stays flat at 4.5%, as efficiency gains offset output growth. AI adoption over a decade allows labor market adjustment without sustained unemployment increases.
• •Tariff Impact Absorption: Companies offset 2025 tariff costs through three mechanisms: passing 50 basis points to consumers as prices, restructuring supply chains and negotiating with suppliers, and improving internal efficiency. This prevented the expected margin compression that concerned analysts earlier in the year.
• •Earnings Concentration Reality: The top 10 stocks now represent 40% of S&P 500 market cap but only 33% of earnings, matching their market cap share from five years ago. The S&P 493 delivered consistent 15% returns annually, demonstrating broad market strength beyond mega-cap technology dominance.