Economic Early Warning for Friday, 09 January 2026

Good afternoon. Here’s your Economic Early Warning Report for Friday, 09 January 2026.

Top of Mind:  Atlanta GDPNow Wow

Banks and analysts took note of the latest Atlanta Federal Reserve Bank GDPNow forecast for 2025Q4, which rose from 2.9% to 5.4% (settling at 5.1%). As was most often explained, this is partially due to the U.S. trade deficit shrinking to the lowest level since the late 1990s. And even then, at least some of that shrinkage was due to higher gold and silver prices and other factors, not necessarily a balancing volume of imports and exports. In short, the numbers are still open to interpretation. But that didn’t stop banks from continuing to publish rosy 2026 outlooks for U.S. economic growth and markets this week. That follows a few weeks of end-of-year reports signalling economic re-acceleration ahead in 2026. That’s the big trend this week. – M.S.

SELECTED COMMENTARY

• BANK OF AMERICA:
  • “A lot of clients have been asking us about the recent notable divergence been jobless claims and layoff announcements… [T]he recent increase in private sector layoff announcements has been largely driven by white-collar jobs. The October jump was primarily led by the technology and warehousing (management, operational) sectors, likely due to substantial layoff announcements by Amazon, UPS etc… The labor market has never gone into recession with claims at such low levels (220-230k). Claims are usually 300k+ during a recession. Even accounting for the factors cited above, we’d expect the claims data to at least deteriorate directionally if layoffs were inflecting sharply upward.” [Morning Market, 07 JAN]
• BLACKROCK:
  • “2025 marked the third straight year of double-digit stock gains even with elevated policy uncertainty in the first half of the year. We see three key lessons. First: immutable economic laws, such as supply chains can’t be rewired quickly, limit policy extremes. Second: mega forces –especially AI, the dominant mega force –trump traditional macro. Third: stablecoins and tokenization of assets show a rapidly evolving financial system. These all require a new investment approach.” [Weekly Commentary, 05 JAN]

• DEUTSCHE BANK:
  • “2026 seems poised to be just as geopolitically volatile as 2025. We believe investors should expect a continued unpredictable and fragmented global operating environment. “
• GOLDMAN SACHS:
  • “As AI adoption accelerates, concerns are growing about its potential to rapidly displace workers or even entire occupations… We find that over the past three decades workers displaced from disrupted occupations—defined as those in the bottom quintile by employment growth—experienced significantly worse labor market outcomes. They took a month longer to find new jobs and faced real earnings losses of over 4% when transitioning between full-time jobs after a layoff, twice the 2% loss for workers displaced from other occupations. They were also 5-10pp more likely to become long-term unemployed or exit the labor force entirely… Our estimates show that older workers bore the largest real earnings losses at over 10%, while losses were roughly similar across education levels. A key mechanism behind this age pattern is occupational mobility: younger workers—especially those under 30—transitioned to different occupation categories at significantly higher rates… Our Global Economics team estimated that AI might displace 6-7% of US workers over the next decade, raising the unemployment rate by up to ½pp relative to its trend during the AI transition period.” [US Daily, 08 JAN]
  • “We expect another year of solid gains for US equities in 2026. We forecast an S&P 500 total return of 12% to a year-end level of 7600. Healthy economic and revenue growth, continued profit strength among the largest US stocks, and an emerging productivity boost from AI adoption should lift S&P 500 EPS by 12% in 2026 and10% in 2027, providing the fundamental base for a continued bull market.” [2026 US Equity Outlook, 06 JAN]
  • “Progress on core PCE inflation stalled this year at 2.8% year-over-year, still noticeably above the Fed’s target. But most of the remaining overshoot and 0.3pp upside surprise to our year-ago forecast appears to reflect the one-time impact of larger than expected tariffs, rather than firm underlying cost pressures. We expect progress on disinflation to resume in 2026, for three reasons. First, we expect the boost from tariffs to year-over-year inflation to fall from 0.5pp now to 0.2pp by December 2026, though not before rising to 0.8pp by mid-2026.Second, we expect shelter inflation to fall from 3.7% year-over-year to 2.3%,below its pre-pandemic pace. Third, wage growth has already slowed to target-consistent levels and will put downward pressure on nonhousing services inflation. ” [US Economics Analyst, 04 JAN]
  • “We see ambiguous but modest risks to oil prices in the short-run from Venezuela depending on how US sanctions policy evolves… Along with recent Russia and US production beats, potentially higher long-run Venezuela production further increases the downside risks to our oil price forecast for 2027 and beyond. Although Venezuela produced ~3mb/d at its peak in the mid-2000s and holds ~1/5 of global proven oil reserves, any recovery in production would likely be gradual and require substantial investment. We estimate $4/bbl of downside to 2030 oil prices in a scenario where Venezuelan crude production rises to 2mb/d in 2030 (vs. our 0.9mb/d base case).” [Oil Comment, 04 JAN]

• JP MORGAN:
  • “US MACRO STRENGTH: yesterday’s data releases suggest considerable upside to US Q4 GDP – Atlanta Fed GDPNow estimates a 5.4%ar gain last quarter (from 2.9% prior).” [Int’l Market Intel, 09 JAN]

• TS LOMBARD:
  • “We see strong growth in the US this year. At 2.5%,our economists are significantly above consensus on US growth in 2026, based on their view of easier financial conditions, a stronger fiscal impulse, a reduced overall impact from tariffs and a gradual rebound in hiring,which should underpin real incomes. While economic fortunes are uneven (e.g., the K-shaped economy), we don’t see any reason to be particularly worried about US growth overall.” [Macro Strategy, 07 JAN]
  • “The market is priced for a soft landing – one in which the Fed takes rates to neutral and leaves them there indefinitely. We have a different view. With the fiscal impulse turning decidedly more expansionary,and pent-up demand in (non-AI) capex and hiring, we think activity will rebound in the spring. Ordinarily that would be good news. The only problem is that Trump’s immigration policies have reduced the size of the workforce and,as demand recovers, capacity pressures are set to reappear in the labour market. That doesn’t mean an inflationary surge is imminent, but it should renew the debate about whether monetary policy is sufficiently restrictive.” [US Watch, 06 JAN]

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