5 key questions for the U.S. economy in 2026

The U.S. system navigated 2025 with a resilience that amazed galore experts, arsenic maturation accelerated and ostentation remained comparatively muted contempt the Trump administration's steep tariffs connected imports. 

Although Americans accidental they aren't yet feeling the benefits of an expanding system amid ongoing concerns about the outgo of living, galore economists expect the U.S. to beryllium connected firmer footing adjacent year.

"I deliberation it'll beryllium a amended year," Oxford Economics main U.S. economist Michael Pearce told CBS News. "Tax cuts volition beryllium halfway stage, and we'll spot a broadening retired of economical strength."

Here are what experts spot arsenic the cardinal economical questions facing the U.S. successful 2026.

Will affordability improve?

Probably not — astatine slightest not successful a mode astir Americans volition consciousness close away. Inflation has cooled since peaking astatine a 40-year precocious successful 2022, but prices stay elevated, squeezing galore households and making it harder to screen basal expenses. About 7 successful 10 Americans polled by CBS News successful December said they were struggling to wage for food, lodging and wellness care, underscoring the affordability issues affecting millions of households. 

Rising inferior costs are different challenge. Americans present wage an mean of $265 per period successful utilities, up 12% since past year, according to a recent report from The Century Foundation, a nonpartisan deliberation tank, and advocacy radical Protect Borrowers.  Meanwhile, the mean household is expected to wage an mean of $995 connected location heating this winter, a 9.2% summation from past year, according to the National Energy Assistance Directors' Association. 

More broadly, ostentation remains good supra the Federal Reserve's 2% yearly target, with the Consumer Price Index successful November astatine 2.7%. For consumers, that means prices for mundane goods and services are inactive climbing, continuing to strain household budgets.

Inflation should chill to astir 2.4% successful 2026, according to a December forecast from the Federal Reserve. But that would inactive permission ostentation supra the cardinal bank's goal, signaling that "higher ostentation volition proceed to measurement connected household finances" adjacent year, William Blair economist Richard de Chazal said successful a report.

About one-third of Americans deliberation their finances are apt to worsen successful the twelvemonth ahead, chiefly driven by ostentation concerns, a caller Bankrate survey found.

Wages volition request to outpace ostentation for a sustained play earlier households consciousness they are getting ahead, Federal Reserve Chair Jerome Powell said astatine a Dec. 10 property conference.

"We're going to request to person immoderate years wherever … nominal wages are higher than ostentation for radical to commencement feeling bully astir affordability," helium noted.

Will the Federal Reserve proceed to chopped involvement rates? 

Another large question is whether the Federal Reserve volition proceed cutting its benchmark involvement complaint aft 3 consecutive reductions that began successful September.

Although the Fed has a alleged dual mandate to support some ostentation and unemployment low, the cardinal slope is presently being pulled successful 2 directions. Prices are rising faster than the Fed would like, which could telephone for higher involvement rates if the inclination persists oregon ostentation re-ignites successful 2026. At the aforesaid time, rising unemployment and cooler hiring mightiness necessitate policymakers to further little rates successful a determination to boost economical growth. 

The Federal Open Market Committee, the Fed sheet that sets monetary policy, successful December penciled successful only one further complaint chopped for 2026. Yet immoderate economists judge the Fed could marque further cuts, particularly if the labour marketplace continues to slow. 

President Trump has argued that the Fed should drastically chopped its benchmark rate, pressing Fed Chair Jerome Powell to trim borrowing costs. With Powell's word acceptable to expire successful May, Mr. Trump is expected to nominate a caller seat who is much unfastened to cutting rates. 

Will lodging go much affordable successful 2026?

Homes crossed the U.S. could beryllium modestly much affordable successful 2026, Chen Zhao, caput of economics probe astatine existent property institution Redfin, told CBS News. 

Mortgage rates are apt to stay successful the debased 6% range, not acold disconnected from today's 30-year owe complaint of astir 6.18%, portion home prices are apt to turn astatine a slower gait than incomes adjacent year.

"We're starting to caput connected a roadworthy that leads to amended affordability metrics, but it's not going to beryllium an overnight shift," she said. "2026 mightiness not consciousness each that antithetic than the extremity of 2025 — it's a dilatory process that mightiness instrumentality 5 oregon six years, but astatine slightest we're heading successful the close direction."

Home prices are projected to dip successful astir 2 twelve large U.S. cities successful 2026, mostly located successful the Southeast and the West, according to a Realtor.com analysis.

Will the occupation marketplace prime up steam?

Hiring could amended successful 2026 arsenic economic maturation accelerates and the effects of tariffs fade, according to Goldman Sachs. 

Average payroll gains could emergence to an mean of 70,000 per period adjacent year, much than treble the 32,000 per period mean successful 2025, economists with the concern slope forecast successful a report. They expect wages to ascent 2.3% successful 2026, accelerating from 1.9% this year.

However, immoderate economists pass that the occupation marketplace could stay comparatively muted arsenic companies crook to artificial quality to amended productivity.

Are stocks successful a bubble?

A captious question for fiscal markets this twelvemonth — are companies progressive successful AI overvalued — is apt to again instrumentality halfway signifier successful 2026. 

The S&P 500 is connected way to extremity the twelvemonth with a summation of much than 17%, with the scale buoyed by artificial quality companies and large tech companies. However, immoderate investors are increasing cautious astir the meteoric emergence of AI-related stocks, questioning whether a bubble is forming. 

Such bubbles — erstwhile banal valuations tally acold up of underlying fundamentals — tin acceptable the signifier for crisp marketplace corrections if capitalist sentiment sours. Yet banal valuations stay beneath the levels seen during the dot-com roar of the precocious 1990s, according to Jonas Goltermann, lawman main markets economist astatine Capital Economics. He expects concern successful AI to proceed adjacent twelvemonth arsenic much companies follow the technology.

Still, though AI stocks are improbable to clang adjacent year, investors' lofty expectations whitethorn beryllium successful for a world check 

"At immoderate point, investors are apt to beryllium disappointed, and the rhythm of ever rising investment, expectations and valuations volition end, arsenic proved the lawsuit with erstwhile equity bubbles," Goltermann said successful a report. 

Overall, forecasters expect a strong banal marketplace performance successful 2026. J.P. Morgan successful November forecast the S&P 500 volition emergence 13% to 15% adjacent year, astir successful enactment with the index's mean summation implicit the past decade.

Edited by Alain Sherter

• Economy