Barron's Live The Year Ahead: Making Sense of the Economic Outlook
Jan 5, 2026
James Knightley, Chief International Economist at ING, shares bold economic predictions, focusing on factors shaping the U.S. outlook through 2026. He anticipates growth rates of 2–2.5% and converging inflation towards 2%. Knightley discusses concerns about weak job creation and wage pressure, while emphasizing the need for better income policies for robust GDP growth. He also explores the impact of labor shortages and reshoring, highlights shifts in global trade dynamics, and warns of potential equity corrections affecting consumer spending.
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Venezuela's Oil Impact Is Slow And Modest
- Venezuela's political change could add oil supply and pressure prices modestly in the medium term.
- Restoring Venezuelan output to pre-Chávez levels could take a decade and $100+ billion, delaying large effects on US inflation.
Moderate Growth With Gradual Disinflation
- ING expects US growth near 2–2.5% in 2026 with gradual disinflation toward 2% later in the year.
- A modest Fed easing path remains plausible as wage growth stays subdued and unemployment edges up slowly.
Jobs Gains Are Narrow And Fragile
- Job gains concentrated in private education, healthcare and leisure accounted for ~81% of recent hires, not traditional procyclical sectors.
- That sectoral concentration makes the labor market fragile and worries the Fed, supporting more rate cuts.