Annual Outlook 2026: Teetering Resilience

As the US and global economies head into 2026, growth remains intact, but the sources of that resilience are increasingly concentrated and fragile. According to PwC’s Annual Outlook 2026: Teetering Resilience, authored by US Chief Economist Dr. Alexis Crow, expansion continues—but depends heavily on a small set of forces that will be tested by shifting financial conditions, policy choices and geopolitics.

PwC forecasts global GDP growth of 2.7% in 2026, broadly in line with 2025, reflecting continued resilience even as momentum remains uneven across regions. While growth is holding up, it is increasingly reliant on a narrower set of drivers than in past cycles.

“The global economy has shown real staying power,” said Dr. Alexis Crow. “But resilience in 2026 isn’t automatic or evenly distributed. It relies on AI-driven investment, supportive fiscal policy and confidence in financial markets—and each of those comes with new constraints.”

In the US, investment tied to artificial intelligence continues to anchor growth. Capital spending on AI, data centers, power generation and digital infrastructure remains a key driver of economic activity. At the same time, the American consumer has proven resilient across income levels, with strong spending evident in both luxury retail and value-oriented chains. Against this backdrop, PwC forecasts that US economic growth will remain steady in 2026, with GDP growth of 2.1%.

PwC expects labor market conditions to remain relatively stable, with the unemployment rate hovering near 4.4% in 2026. Inflation dynamics, however, are becoming increasingly uneven. While an oversupplied oil market is likely to keep headline inflation contained, electricity prices are rising in parts of the country as power demand surges—particularly from data center buildouts. According to the Energy Information Administration, residential electricity prices are forecast to rise by 4.2% in 2026, while PwC projects medical care costs will increase by about 8.5%, contributing to stickier core inflation and making the outlook more sensitive to monetary policy decisions.

Globally, resilience is evident—but not evenly distributed.

In Europe, growth remains modest but stabilizing. PwC forecasts 0.9% growth in the eurozone in 2026, supported by public investment in defense and digital infrastructure, continued disbursement of EU recovery funds, and softer energy prices. Germany, Spain and Italy are expected to underpin regional performance, while consumer spending in France has held up despite political uncertainty.

Emerging market and developing economies continue to outperform advanced economies in growth terms, and have generated strong investment performance across asset classes. Improved macroprudential frameworks (such as reducing fiscal deficits, and bolstering stronger foreign exchange reserves) as well as the fostering of deeper regional trade ties are supporting expansion within certain EMs, and in regions such as Asia. India stands out as one of the fastest-growing major economies in 2026, with expected growth of around 6.7%, driven by high-tech exports and rising real wages and corresponding consumption activity.

This is where the concept of “teetering resilience” comes into focus.

Economic growth in the US is increasingly reliant on a handful of sectors and easy financial conditions. Inflation pressures are shifting rather than disappearing, while record levels of public debt levels in advanced economies render bond markets in a fragile position. Currency movements, including a projected further weakening of the US dollar, add another layer of complexity for businesses and investors navigating global markets – but also, opportunity.

“These are not classical ‘all boats overboard’ recession signals,” said Crow. “But they raise doubts about the breadth and durability of the current growth cycle. In addition, certain policy shifts may have longer term negative impacts for the economy – about which markets remain stubbornly complacent.”

One of the report’s central themes is the rapid expansion of stablecoins, which are moving into mainstream payment and cross-border transaction flows. Today, 99% of stablecoins are backed by the US dollar, creating a concentration risk at a time when the dollar itself is expected to soften further in 2026.

While stablecoins may offer efficiency and cost advantages, their growing scale raises new considerations for financial stability. As issuers increase their exposure to government debt markets and become more interconnected with the broader crypto ecosystem, transparency, regulation and reserve quality will play an increasingly important role in shaping outcomes for investors and policymakers.

Looking ahead, the outlook highlights underappreciated dynamics that could shape the next phase of growth in both the US and globally.

In the US, the AI boom is reshaping real estate, with data centers emerging as a core asset class at the intersection of infrastructure, energy, and land use. Looking beyond capital and energy inputs, investors and developers will do well to focus on human capital – that is, the labor required to build out data centers – the supply of which is dented by current immigration policy in the US. Shortages of labor have also led to bottlenecks in data center developments in Japan.

We also explore the prospects for de-dollarization in the US real estate market. So far, cross-border capital flows have held up well – but should the value of the dollar decline by another 10% in 2026, foreign investors may pause. This could open up an opportunity for USD domestic investors – and we highlight the development of attainable housing – as well as retail – as two promising sectors for undaunted investors.

The outlook also highlights Europe’s pensions gap as a perhaps overlooked business and investment opportunity. Private pension assets in the US are more than ten times those in the euro area. Closing that gap has become increasingly critical for macroeconomic, demographic and geopolitical reasons, making 2026 a pivotal moment for Europe to take a page out of Wall Street’s book.