TOP 10 LIST: 2026 Predictions and Hopes

Publisher’s Note: What happens in the economy, financial markets, the Federal Reserve, and government/politics affects our business environment and personal finances in the CSRA. 

Dr. Rick Franza’s 2025 predictions graded out as a “B”, which would make his students proud!

WHAT WILL HAPPEN ECONOMICALLY IN 2026?

In some cases, Dr. Franza is separating his predictions from his hopes. Without further ado and in ode to David Letterman, here is Dr. Rick Franza’s Top 10 List.

• The U.S. Economy, Financial Markets, and the Federal Reserve
  1. Prediction #1: GDP Growth for the year at or near 3%.  Most expert predictions are somewhat lower, typically between 2.0% and 2.5%.  I see two main reasons for higher growth:  a) An increasingly relaxed regulatory environment (more than 600 federal regulations were rolled back in 2025); and b) “Big Beautiful Bill” kicks in, which will stimulate businesses buying capital equipment, building manufacturing plants, and doing more research and development.
  2. Prediction #2: Inflation rate will remain sticky and likely remain in the 2.5% to 3.0% range.  Experts are all over the place with respect to inflation.  Some believe it will reach the Fed’s target of 2%, while others are not expecting any drop and believe the Fed is moving toward accepting 2.5% to 3.0% as the “new normal” target.  (Hope:  President Trump continues to roll back tariffs, which helps move the inflation rate closer to 2%).
  3. Prediction #3: Job Market will be better than anticipated.  While many experts anticipate a stagnant or slow job market, I predict that the combination of economic growth, better understanding of AI utilization, and growing interest in trades by younger people will help boost the job market.  While AI investment is growing, companies are better understanding how to use it as a “force multiplier” rather than to fully replace workers.
  4. Prediction #4: Equity Markets will continue their winning ways, with the S&P increasing by 10-12% for the year, but it will be a bumpy year with multiple corrections of 10% or more.  The S&P 500 ended 2025 at 6845, an increase of more than 16% for the year.  Most market prognosticators are predicting increases in the S&P between 4% and 18% in 2026.  While I think it will be an overall positive year for the markets, given my economic growth projection, equity prices are currently high, and I expect at least two corrections of at least 10% during the year. (Hope: As someone who follows the markets regularly and is also not too many years from retirement, I hope that there are no corrections as I predict.)
  5. Prediction #5: Kevin Hassett will be nominated by President Trump as the next Federal Reserve Chair.  While there are five finalists for the position, the frontrunners are the two Kevins:  Hassett and Warsh.  Choosing Hassett is a double-edged sword for many who see him as the most qualified with his Ph.D. in Economics and strong government background, but also seen him as most likely to be influenced by the President as a “Trump loyalist.”  Hassett has been saying all the right things, and I think he can thread the needle of guiding monetary policy such that it complements fiscal policy without being seen as the President’s puppet.
  6. Prediction #6: The Federal Reserve will make three interest rate cuts (0.25%) this year prior to the midterm elections.   Despite my confidence in Hassett being able to appear independent, he will push hard for cuts that President Trump would expect to help the economy before the elections.  (Hope:  I hope potential cuts are data-driven and do not drive higher inflation levels.)
• Business Environment
  1. Prediction #7: Workplaces will see an accelerated AI integration.  The companies that will “win early” in AI are those who best learn how to increase AI-human collaboration to make humans more productive.
  2. Prediction #8: Companies will increase their investment and reliance on cybersecurity.  The combination of the proliferation of both “bad actors” and AI utilization increases the likelihood of advanced threats. (Hope: This may further stimulate the “cyber tsunami” that we have been anticipating in the CSRA for a number of years.)
  3. Prediction #9: Most valued skill sets in the marketplace will include skilled trades (e.g., plumbing, electrical), “power skills” (e.g., communication, critical thinking, emotional intelligence, adaptability), and how to create resilient supply chains.  Each of these areas appear to be most needed depending on the industry, company, and/or position.
• Government and Politics
  1. Prediction #10: The Republican Party will retain the majority in the US Senate, but lose its majority in the US House.  This split government will significantly limit legislation during the next two years. (Hope: The two parties will be forced to work together on critical issues such as Social Security reform.)

BONUS PREDICTION:  There will not be enough traction in the Georgia Legislature to eliminate the state income tax, but work will continue to further lower the flat income tax rate. (Hope:  State income tax is not eliminated until a solid plan is developed to replace the revenues in a way that is fair to all Georgia taxpayers.)

While I make no guarantees on the accuracy of these predictions, I do hope that I have provided you with some information that can help your business/economic planning for the coming year.  I hope your new year is off to a great start and wish you blessings throughout the year.