Despite the noise, Desai’s baseline remains constructive on US activity. She sees several supports for growth: resilient household demand, an early-year fiscal tailwind, easier monetary conditions and a continuation of the AI-related investment boom. Desai cites Brookings estimates that point to fiscal stimulus worth well above one percentage point of GDP growth, implying a meaningful boost to demand momentum in the first part of the year. “I maintain a constructive outlook for US growth,” Desai says.
A volatile mix of policy shocks and technological optimism is shaping Franklin Templeton’s outlook for the US in 2026. Changes in tariff policy have unsettled trade assumptions, stagflation concerns have lingered, and a prolonged government shutdown has complicated the economic read by disrupting access to key data. At the same time, enthusiasm around generative artificial intelligence has lifted market sentiment and amplified debates about the pace and limits of near-term delivery.
“Uncertainty and volatility, in short,” says Sonal Desai, chief investment officer at Franklin Templeton Fixed Income.
