Overview
- The IMF’s latest World Economic Outlook describes global prospects as subdued with risks tilted to the downside, even after slight forecast tweaks.
- U.S. GDP grew at a 4.3% annual rate in Q3 and equities advanced this year, yet unemployment rose to 4.6% by November as hiring slowed and job gains concentrated in health care.
- AI-related spending accounted for the vast majority of first-half 2025 U.S. growth, created relatively few jobs, and now dominates market capitalization, raising concerns about a painful correction.
- Economists expect the labor market to stay soft through much of 2026 with muted hiring, slower wage gains and elevated joblessness, though recent Fed rate cuts and new tax measures could lend support.
- Regional weak spots persist as Europe faces slow 2026 growth (France and Germany 0.9%, Italy 0.8%, U.K. trimmed to 1.3%), China contends with a prolonged property slump and deflation risks, and Russia’s expansion has cooled with about 1% growth projected next year.