Welcome to 2026, a year my gut tells me will wind up being better for all of us than we may be expecting right now. What’s fueling this sentiment? Just a bunch of things I’ve been reading from those who are dialed in much more than me. Here is what to expect in 2026:
In a nutshell, the feeling out there from everything I’ve been reading is that the U.S. in 2026 will have solid economic growth, lower unemployment and slightly lower inflation than in 2025. Tariffs will continue to push up inflation, but the economy will likely get a boost from tax cuts. What this means for retail flooring sales is anyone’s guess, but I am pretty sure your business will again be driven by that high-end customer who will be buying better goods and more of them.
At the same time, Federal Reserve chairman Jerome Powell’s term expires May 15, and it is as certain as death and taxes that he will be replaced by someone more aligned with President Trump’s desire to drastically slash interest rates at all costs. This would make borrowing more attractive, which would in theory stimulate the housing market. This would come on the heels of three consecutive quarter-point reductions that began in September.
The thing to remember is that if a new chairman doesn’t come in until mid-May, I can’t imagine a significant rate cut until June. So, like the past few years, we are looking at the second half of the year to turn the corner on housing.
There is also a thought that homes across the U.S. could be modestly more affordable in 2026, according to Chen Zhao, head of economics research at real estate company Redfin. Mortgage rates were expected to remain in the low 6% range, but all bets are off if the new Fed chair appeases the president and makes significant cuts. Home prices are projected to dip in about two dozen major U.S. cities in 2026, mostly located in the Southeast and the West, according to a realtor.com analysis.
But don’t just take my word for it. Here is a compilation of assessments by some well-regarded economists:
Torsten Slok, chief economist,
Apollo Global Management
“2025 was a year of remarkable resilience for the U.S. economy. There were a number of headwinds over the last several quarters that were weighing on growth, but nevertheless, the economy has done really well. The trade war, immigration restrictions that were weighing on the labor market, and the restarting of student loan payments was also a headwind to consumer spending.
“We should see growth pick up more in 2026. The Big Beautiful Bill is likely to create growth because of the expensing of capital expenditures. We’ve also seen the dollar as well as oil prices go down, which are also helpful for growth.”
Jack Albin, CFA, chief investment officer,
Cresset Capital
“2026 kicks off with a rare convergence: massive fiscal stimulus colliding with new Federal Reserve leadership. The Big Beautiful Bill delivers $50 billion in tax refunds thanks to over-withholding. It represents the largest tax legislation since 2012, adding $3 trillion to $4 trillion in deficits over the next 10 years through extended rate cuts, bigger SALT deductions and a boosted standard deduction. With refunds front loaded into Q1, fiscal policy starts 2026 on full throttle. Meanwhile, Jerome Powell’s term ends May 15 and Kevin Hassett leads the succession rate with 75% odds. This transition signals more aggressive rate cuts ahead, including possible yield curve management strategies to help housing markets by reducing mortgage rates…”
Josh Hirt, CFA, senior economist,
Vanguard
Vanguard expects the job market to bounce back next year after dragging in 2025 as businesses ramp up their investments in AI and other projects, and economic growth renews demand for workers. Vanguard expects the unemployment rate to drop to 4.2% from its November 2025 level of 4.6%.
The team expects the economy to accelerate in 2026, putting the GDP’s rate of growth at 2.25%, thanks to two key themes: First, Vanguard expects investment numbers to boost growth— and Hirt attributes that to more than just AI. “If you look broadly, the investment numbers that we’re seeing this year are quite strong,” he said.
He expects fiscal policy to be the other driver, specifically the tax cuts that will primarily take effect in 2026. “We do think that that’s going to provide a meaningful boost to growth,” he said.
Hirt said he expects that consumer prices, excluding food and energy, will rise 2.6% in 2026, down just slightly from the 2.8% annual increase in September 2025.
