Morgan Stanley's Michael Gapen Predicts US Economy To Return To ‘Modest Growth’ In 2026

The economist predicts the U.S. economy will grow at 1.8% in 2026 and 2% in 2027.

Morgan Stanley’s Chief U.S. Economist Michael Gapen on Wednesday predicted that the United States economy would return to “modest growth” in 2026.

“Last year, we predicted slow growth and sticky inflation, mainly because of strict trade and immigration policies – and this proved accurate. But this year, the story is changing. We see the U.S. economy finally moving past the high-uncertainty phase,” Gapen said.

The economist predicts the U.S. economy will grow at 1.8% in 2026 and 2% in 2027. However, President Donald Trump’s tariffs could keep prices firm in the first half of 2026, according to Gapen.

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