Economic Forecast 2026: An Uneasy Equilibrium

PUBLISHED JANUARY 2026

By almost any conventional measure, 2025 should have felt like a victory lap for investors.

The stock market delivered returns that would have seemed implausible a year earlier. Inflation cooled without collapsing demand. The economy avoided the recession that had been forecast, postponed, re-forecast, and postponed again. For many investors—particularly those with the balance sheets to ride out volatility—it was easy to conclude that the system had once again bent without breaking.

Yet among four prominent economic and investment executives in this region, there is little appetite for celebration. Their collective assessment of 2025 is less about what went right than about what was quietly deferred—and why 2026 will test assumptions formed during a remarkably forgiving stretch of market history.

If 2025 taught investors anything, it was that markets can deliver exceptional returns even when the underlying economic signals are deeply mixed. Area forecasters from various financial-services disciplines agree on that much. Where they diverge—sometimes sharply—is why
that disconnect occurred and what it implies for 2026:

Scott Colbert, of Commerce Bank, views the past year as a case study in how capital markets can decouple from economic breadth without the economy itself being fundamentally weak. 

Mariner’s Bill Greiner, by contrast, is more inclined to see 2025 as a year in which liquidity, policy distortion, and narrative momentum over0whelm-ed traditional signals.

At UMB Bank, focuses less on the spectacle of index performance and more on what quietly changed underneath—particularly in credit markets and business confidence. 

Creative Planning’s Jamie Battmer, meanwhile, is the most explicitly investor-facing of the group, framing 2026 not as a macro puzzle to solve, but as a behavioral test for affluent households accustomed to a decade of forgiving markets.

Together, their views form a composite picture of an economy that did not break—but also did not heal.

Concentration Consternation

All four acknowledge that the headline equity performance of 2025 was strong by almost any historical standard. Yet none views those returns as representative of the opportunity set investors actually faced.

Greiner is particularly blunt on this point. From his perspective, the S&P 500’s gains told “a technically accurate but economically misleading story.” He emphasizes that the dominance of mega-cap growth stocks has reached a point where index-level analysis increasingly obscures more than it reveals. In his words, the market’s structure now “rewards scale and narrative far more than incremental improvement in underlying business conditions.”

Kelley arrives at a similar conclusion from a different angle. He notes that many mid-sized and privately held businesses—especially those dependent on credit or discretionary consumer demand—experienced a materially different year than index investors did. Equity markets surged, but capital access tightened, hiring slowed, and margins came under pressure in sectors far removed from AI and cloud infrastructure. 

“There’s a temptation,” Kelley cautions, “to assume that strong markets mean strong operating conditions. For a lot of businesses, that simply wasn’t true.”

Battmer translates that divergence into portfolio risk. Many high-net-worth clients, he argues, were unintentionally overexposed to a narrow slice of the market simply by owning broadly diversified index products. “Diversification by label,” as he puts it, “is no longer diversification by outcome.” That reality matters more in 2026, when valuations leave less room for narrative-driven multiple expansion.

Colbert believes sector participation in economic growth was actually broad in 2025, even if equity returns were not. His expectation that leadership may broaden in 2026 is not universally shared—but it is part of the debate rather than the conclusion.

Lost Momentum?

On the real economy, consensus is stronger, though the emphasis differs. None of the four see a recession as the base case for 2026. All anticipate slower growth, heightened fragility, and reduced margin for error.

Greiner frames the economy as being in a “late-cycle without the excesses” phase—not overheating, but no longer accelerating. He is particularly attentive to demographic drag and policy uncertainty, arguing that even modest shocks now have outsized effects because the labor force is no longer expanding in the way it once did.

Kelley zeroes in on business sentiment. While consumer spending held up through 2025, he notes that capital spending decisions increasingly reflected caution rather than confidence. Projects were delayed, not canceled; hiring plans were trimmed, not reversed. That kind of behavior, he suggests, often precedes a more visible slowdown. “It’s not contraction that worries me,” Kelley says, “it’s hesitation.”

Battmer connects that hesitation to household behavior at the upper end of the wealth spectrum. While affluent consumers remain insulated from inflation pressures, they are becoming more selective, more tax-sensitive, and more focused on liquidity than at any point since before the pandemic. That shift, subtle as it may seem, has implications for everything from luxury real estate to private investment pacing.

Colbert again adds texture, particularly on GDP arithmetic and sector participation, but his optimism about 2026 growth being modestly better than 2025 now sits alongside Greiner’s and Kelley’s more guarded interpretations.

Enter The Fed

On monetary policy, these executives are closer than market commentary would imply, though they approach the Fed’s actions from different priorities.

Greiner views the Fed primarily through the lens of financial stability. From his standpoint, the central bank is attempting to normalize policy without triggering a repricing of risk assets that would destabilize credit markets. The challenge, he notes, is that markets have grown accustomed to being rescued rather than merely supported.

Kelley focuses on the yield curve and credit spreads, arguing that bond markets are signaling confidence in continued easing—but not in robust growth. He sees opportunity in fixed income precisely because expectations are now more realistic. “The era of bonds as dead money is over,” he suggests, “but they’re not going to bail out bad equity decisions either.”

Battmer brings the discussion back to portfolios. For his clients, the key question is not how many cuts the Fed delivers, but whether rates fall because inflation is beaten or because growth falters. The distinction matters enormously for asset allocation, especially for investors who increased equity risk during the zero-rate era and never fully recalibrated.

Colbert’s analysis of the Fed being near historical neutrality remains important, but it now functions as context rather than the dominant interpretation. His expectation of additional cuts is balanced by others’ caution that easing does not guarantee market leadership continuity.