Insights Now 2026 Outlook: AI lift and economic drift
Dec 5, 2025
Jack Manley, a Global Market Strategist at J.P. Morgan Asset Management, dives into the 2026 investment landscape. He discusses the interplay between AI-driven growth and broader economic challenges. Key insights include the importance of rebalancing portfolios away from U.S. large-cap stocks, utilizing alternatives for diversification, and employing tax-aware strategies to mitigate risks. Manley emphasizes the need for prudent allocation that considers both income generation and growth potential as investors navigate an evolving market.
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A Two-Speed 2026 Economy
- The U.S. economy should show a strong first half of 2026 then slow as one-off tax refunds fade.
- Net result could be ~2% growth, ~2% inflation, and ~4% unemployment by year-end.
Divergence Between Sentiment And Markets
- The economy exhibits sharp divergences: very low consumer sentiment alongside bubbly equity valuations.
- K-shaped outcomes and AI tailwinds create underlying volatility and uneven gains.
Policy Uncertainty Could Fuel Inflation Spikes
- Tariff rulings, possible rebates, and election-year stimulus could create temporary profit and inflation swings.
- The Fed fears easing too fast if fiscal stimulus meets supply constraints, risking persistent inflation above 2%.