Will The Economy Slow Or Grow In 2026? | George Gammon

**George Gammon** (0:00)
What's your max upside for the S&P 500, if you're an analyst right now? You know, maybe 10, 15%, something like that. Okay, great. Well, based on those valuations, what's your max downside? Especially looking at the labor market. And if we are in that 2007-2008 cycle, then you've got 30, 40, 50% downside on the S&P 500 And that's definitely asymmetry, but that's the opposite asymmetry. That's the bad kind of asymmetry.

**Adam Taggart** (0:37)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. Concerns about the weak consumer, the frozen jobs and housing markets, rising debt delinquencies, tariff-driven inflation, stubbornly high bond yields and geopolitical stresses cause many analysts to worry that the economy will slow materially this year. But others, especially those listening to the Trump Administration, are predicting the economy will boom in 2026 From all the AI capex spending, the energy grid build out, reshoring of manufacturing, capital influx from new trade deals, deregulation, historic tax refunds, and other commerce-friendly developments. So which is it? Will the economy slow or grow this year? To discuss, we've got the good fortune to welcome back George Gammon to the program. George is best known for his financial education media endeavors, most notably his George Gammon and Rebel Capitalist YouTube channels. George, thanks so much for joining us today.

**George Gammon** (1:38)
Thanks for having me on.

**Adam Taggart** (1:40)
Hey, it's a pleasure to have you back on, my friend. Well, look, there's a lot going on in the world right now. I even haven't had much of a chance to watch it today because I've been recording, but obviously the president's- Pardon me?

**George Gammon** (1:54)
It's just the taco trade.

**Adam Taggart** (1:56)
The taco trade, okay. But anyways, presidents at Davos, there's a lot of developments swirling there. I'm sure we'll talk to a number of them. But why don't we start with the question that I just posed here in the introduction about the economy, whether it will slow or grow this year? Do you have a strong opinion one direction or the other?

**George Gammon** (2:15)
I think it's important for the audience to know that it's always doing both. It's just to what degree. Right. So as an example, you're talking about there at the AI CapEx spend, that will probably continue, and I'm assuming we're going to get a lot of fiscal, but that doesn't necessarily mean that the high water mark increases, because if you have a bucket of water and you're pouring water in at the top, but water is draining out at the bottom, you could just be maintaining that level.

**Mike Preston** (2:42)
Sure.

**George Gammon** (2:42)
And that's what I'm trying to say. So the question isn't whether water is coming in or water is going out, because that's definite. We know that for sure. It's just is that level of water going to decrease or increase? And usually, the two metrics that I would look at, the most would be just GDP and the labor market. But what's interesting is they're telling two completely different stories. So you look at, and I think GDP is actually coming out tomorrow. We're talking on January 21st, so that'll be really interesting, or at least a revision. But the labor market, when you look at non-farm payrolls, we've had several negative numbers in 2025 I know it's 2026 now, but back last year, we had several negative prints, and that's before the absolute final revisions. And I went back for a couple of videos and did some research there, and I found that that's very rare outside of recession. Now, sometimes you get a one-off because of a big weather event or maybe a huge employer like Walmart, the employee's going on strike or something like that.

**Adam Taggart** (3:49)
A government shutdown, I mean...

**George Gammon** (3:50)
There you go, I was just going to say government shutdown. But usually, you just get this bounce back and then you get back to that same mark. It's very rare that you get three, four, five, six months after revisions of negative non-farm payrolls outside of a recession. And if I had to place the emphasis on one indicator, it would definitely be the labor market. So if I was trying to predict the economy. Now, that said, I don't think that has anything to do with the stock market, unfortunately. I think that a lot of people get confused that, oh, my gosh, if the stock market is going up, well, then all you people that have been bearish on the economy, well, then you're all wrong. And that's not true. There can be an inverse relationship because bad news is good news. Because if the labor market is deteriorating, then the Fed is going to drop rates. And you get this Pavlovian response where it's Jim Cramer buy, buy, buy, buy, buy. And you combine that with the passive that our good friend Mike Green always talks about. And that usually leads to the stock market going up, regardless of what's happened to the underlying economy. But your question is directed toward the economy itself. So that's why I wanted to focus on nominal GDP and the labor market. Now, one of those two has to give, Adam. My base case would be that it's going to be GDP. But I don't know. Those two have to match up at some point in time. You can't have the labor market deteriorating. You can't have negative non-farm payrolls.