By Peter Wechsler
President & Co-Founder, Franklin Retirement Solutions
[email protected]
If you follow the markets, you are probably thrilled they came back this month after a terrible March. Back in early January I told you to fasten your seatbelts, that this was going to be a volatile year. If you remember last April with the tariffs and how far the markets fell so quickly and then powered back, it feels like this is a spring kind of thing. And even though the markets have come back, the roller coaster ride is still no fun.
As I pen this column on Thursday morning, the S&P is up 4.3% year-to-date and the tech-heavy Nasdaq is up 6.1%. The Dow, up 3% year-to-date, is the laggard of the big 3 indexes.
I’m on the investment committee of my high school alumni association, and one of our portfolio managers (a really big company) discussed the global economy outlook for 2026. Here’s the short version of what they said:
- Growth: The global economy likely will accelerate in 2026. Most economies are in a growth trend as tariff impact recedes. Spending on AI and the resulting productivity improvements are a growth additive. Last, monetary and fiscal policy supports economic growth.
- Inflation: Underlying inflation pressure should generally recede due to weakness in the labor market.
- Central Banks: Monetary policy could continue to ease. The Fed continues to focus on the labor markets. Bank of England continues to lower interest rates while the European Central Bank and the Reserve Bank of Australia have held rates steady.
- Risks: In the U.S., there’s a risk to growth if consumption slows down due to labor market weakness. The global economy could also overheat in 2027, but we’ll worry about that next year. They are also concerned about the high price and concentration of AI stock valuations.
All sounds pretty good for this year…but…this is one company’s opinion. What we don’t know is how the tensions around the world will affect the global economy and ultimately the markets here. Keep those seatbelts fastened but know we are keeping an eye on your investments. You’ll see trades come through on your Schwab accounts as we adjust to market change.
Go Flyers and Sixers…
Peter