If you\u2019ve been watching the headlines, you understand that the U.S. economy is currently defying the usual gravity.<\/p>\n
While growth for an economy of this size is typically modest, a perfect storm of policy shifts and tech breakthroughs suggests 2026 could be a record-breaker.\u00a0<\/p>\n
The Momentum is Real\u00a0<\/p>\n
The Atlanta Fed\u2019s GDPNow\u2014the “real-time” speedometer of the economy\u2014is currently projecting a respectable 4.2% expansion for Q4 2025.<\/p>\n
Looking forward, U.S. Commerce Secretary Howard Lutnick is even bolder, suggesting we could see 5\u20136% growth in 2026.<\/p>\n
For a country as large as the U.S., those aren’t just solid numbers; they\u2019re historic.<\/p>\n
But how can the U.S. achieve such growth?\u00a0<\/p>\n
A Changing Guard at the Fed<\/p>\n
The biggest story for your 2026 outlook is the leadership change at the Federal Reserve.<\/p>\n
With Jerome Powell\u2019s term ending in May, President Trump has tapped Kevin Warsh to take the reins.\u00a0<\/p>\n
Wall Street Misinterprets Warsh as a \u201cHawk\u201d<\/p>\n
While some on Wall Street fear Warsh is a “hawk” (which sent silver prices tumbling recently), his past comments paint a different, albeit, nuanced picture.<\/p>\n
First, the charts on precious metals were vertical and due for a pullback regardless of who President Trump selected as the next Fed Chair.<\/p>\n
Second, previous interviews suggest that like Alan Greenspan in the 90s, Warsh believes that when technology makes us more productive, the economy can grow faster without triggering inflation.<\/p>\n
\u201cThe closest analogy that I have in central banking is Alan Greenspan in 1993 and 1994. The internet revolution was with us. He believed, based on anecdotes and rather esoteric data, that we weren\u2019t in a position where we needed to raise rates because this technology wave was going to be structurally disinflationary. A lot of his peers at the Federal Reserve, and certainly in the academic profession and economics said:\u00a0‘Oh, the economy is overheating. You need to get going and raise rates. This will be inflationary.’ And he sat on his hands and he persuaded his colleagues to be patient. As a result, we had a stronger economy. We had more stable prices and we had greater U.S. competitiveness,”\u00a0said Warsh.\u00a0<\/p>\n
In other words, if there\u2019s an AI productivity boom, Warsh won\u2019t be afraid to cut rates.<\/p>\n
Also, it\u2019s important to know that despite the carnage in precious metals, rate cut odds actually increased after Warsh was announced as Jerome Powell\u2019s replacement at the Fed.\u00a0<\/p>\n
More . . .<\/p>\n
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