{"id":376942,"date":"2025-12-30T01:30:10","date_gmt":"2025-12-30T01:30:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/376942\/"},"modified":"2025-12-30T01:30:10","modified_gmt":"2025-12-30T01:30:10","slug":"2026-another-year-of-living-audaciously","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/376942\/","title":{"rendered":"2026–Another Year Of Living Audaciously!"},"content":{"rendered":"

This is a reprint of our December 11, 2025 Morning Briefing.<\/p>\n

2026 I: What Will Likely Go Right? <\/p>\n

The Roaring 2020s remains our base-case scenario. For 2026, we are raising our subjective odds of this prospect from 50% to 60%. We are less concerned about a meltup\/meltdown scenario now, so we are lowering the odds of that from 30% to 20%. We are keeping our bearish scenario at 20%.<\/p>\n

\u00a0In our base-case scenario, real GDP should grow 3.0%-3.5% next year, following this year\u2019s likely gain of 2.0%-2.5% (Fig. 1<\/a> below). We expect the labor force to increase by only 0.5%, implying that productivity will rise by 2.5%-3.0% in 2026 (Fig. 2<\/a>). Productivity-led growth should reduce unit labor cost inflation to 2.0% next year, bringing consumer price inflation (measured by either the CPI or PCED) down to 2.0% as well (Fig. 3<\/a>).<\/p>\n

\"\"Figure 1<\/p>\n

In this scenario, we expect that S&P 500 companies\u2019 collective earnings per share will increase from $268 this year to $310 next year. By the end of next year, we expect the industry analysts\u2019 consensus to be $350 for 2027 (Fig. 4<\/a> below). The forward P\/E range by the end of next year should be 18-22, resulting in our target range for the S&P 500 of 6300-7700 (Fig. 5<\/a> below). Our single-point estimate is the upper end of this range.<\/p>\n

\"\"Figure 4\"\"Figure 5<\/p>\n

Our year-end 2026 target for the S&P 500 assumes that the economy and earnings will remain resilient. Our odds of a severe correction or a bear market, triggered by either recession fears or an actual recession, remain low at 20%.<\/p>\n

We see several reasons why economic growth is likely to be strong, supporting our Roaring 2020s productivity story:<\/p>\n

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