Goldman Sachs Cuts 2026 U.S. GDP Growth Forecast Amid Oil and Geopolitical Risks

Goldman Sachs has revised down its 2026 U.S. economic growth forecast, citing persistent geopolitical conflicts in the Middle East, soaring energy prices, and tighter financial conditions that are weighing on consumer spending and business activity.
The investment bank lowered its full-year U.S. GDP growth forecast from 2.8% to 2.6%, a small but meaningful adjustment that signals growing caution about the U.S. economy’s resilience. The bank’s economists warn that further downward revisions are possible if Middle East tensions escalate and oil prices continue to climb.

Alongside the growth cut, Goldman Sachs raised its 2026 inflation and unemployment projections. The firm now expects the U.S. unemployment rate to peak at 4.6% in the fourth quarter of 2026, as higher energy costs and slower economic growth lead businesses to scale back hiring.

A growing number of economists are warning that a prolonged rally in oil prices could push the U.S. economy toward stagflation-like risks — a combination of slower economic growth and elevated inflation — a scenario not seen since the 1970s. Stagflation would create a difficult dilemma for the Federal Reserve, as cutting rates to boost growth could worsen inflation, while keeping rates high could further slow the economy.

For investors and households, the revised outlook means more cautious spending and investment decisions in the coming months, as the U.S. economy navigates a delicate balance between growth, inflation, and global geopolitical risks.