Odd Lots Goldman's Hatzius and Snider on the Outlook for 2026
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Dec 29, 2025 
Jan Hatzius, Goldman Sachs' chief economist, and Ben Snider, chief U.S. equity strategist, dive into the surprising developments of 2025 and the outlook for 2026. They discuss the strong GDP amidst flat unemployment, fueled by productivity gains and the interplay of tariffs. Both explore the S&P 500's projected target of 7600 and what it signals about market concentration and AI's uncertain impact on productivity. Expect a nuanced take on consumer spending and market risks, with insights into how companies are adjusting to navigate economic pressures.
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Tariffs Are Largely A Price-Level Shock
- Goldman initially expected ~100 bps tariff pass-through but observed ~50 bps so far.
- They view tariffs mainly as a one-time price-level increase like a VAT, not permanent inflation.
How Firms Protected Margins
- Companies offset tariff and cost pressure by raising prices, squeezing suppliers, and cutting costs.
- That mix, plus productivity gains, kept S&P margins roughly flat instead of collapsing.
Market Focus On Near-Term AI Wins
- Markets have focused on near-term earnings beneficiaries of AI (semis, hyperscalers, power) rather than speculative long-run winners.
- That differentiates the current cycle from the late-1990s dot-com valuation boom.