2026 Economic Outlook: Wells Fargo’s Forecast for GDP, Inflation & Equities

Wells Fargo’s 2026 outlook centers on the interaction of multiple favorable trends—tax policy easing, regulation rollback, technology spending, and looser monetary policy—as fundamental growth drivers. The report proposes that these trends are already in motion and, together, may overcome headline risks such as geopolitical tension or near-term volatility. Investors are thus encouraged to prioritize signals like productivity gains and business investment rather than reacting to short-term noise. [1]

Key forecast figures offer a coherent macro picture: GDP growth of 2.4% and inflation at about 2.8% indicate modest, though above-target price pressures. Fed funds target is expected to land between 3.00%–3.25% amid rate cuts, and S&P 500 likely reaching 7,400–7,600. Equity breadth, especially outside mega-cap tech, is likely to improve with industrial and precious metals among expected outperformers. [1]

Insights from other institutions like Bank of America align closely: also projecting 2.4% GDP for the U.S., sustained AI investment, and rate cuts—though the growth in equity prices is seen as more muted. BofA’s S&P 500 year-end target of 7,100 assumes ~14% EPS growth but restrained price appreciation. [2] J.P. Morgan similarly anticipates double-digit gains globally, but notes risks around sticky inflation and polarized sector performance between AI- and non-AI-centric businesses. [3]

Strategic implications for investors include prioritizing sectors benefiting from technology-driven capital spending, focusing on international diversification to capture differing global trends, placing more weight on intermediate-term fixed income as yields rise modestly, and integrating alternatives and private capital to manage volatility and uncover value. Proper valuation discipline is essential—especially in sectors where momentum may be peaking. [1][2]

Open questions remain: How much and how fast will the Fed actually cut rates? Will inflation remain at or decline toward target, or remain sticky above 2%? Can productivity growth—especially from AI spending—sustain the gap between earnings expectations and market risk? Finally, whether international exposures will benefit or suffer from global policy divergence deserves attention.