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.

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“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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