If you’ve been watching the headlines, you understand that the U.S. economy is currently defying the usual gravity.
While growth for an economy of this size is typically modest, a perfect storm of policy shifts and tech breakthroughs suggests 2026 could be a record-breaker.
The Momentum is Real
The Atlanta Fed’s GDPNow—the "real-time" speedometer of the economy—is currently projecting a respectable 4.2% expansion for Q4 2025.
Looking forward, U.S. Commerce Secretary Howard Lutnick is even bolder, suggesting we could see 5–6% growth in 2026.
For a country as large as the U.S., those aren't just solid numbers; they’re historic.
But how can the U.S. achieve such growth?
A Changing Guard at the Fed
The biggest story for your 2026 outlook is the leadership change at the Federal Reserve.
With Jerome Powell’s term ending in May, President Trump has tapped Kevin Warsh to take the reins.
Wall Street Misinterprets Warsh as a “Hawk”
While some on Wall Street fear Warsh is a "hawk" (which sent silver prices tumbling recently), his past comments paint a different, albeit, nuanced picture.
First, the charts on precious metals were vertical and due for a pullback regardless of who President Trump selected as the next Fed Chair.
Second, previous interviews suggest that like Alan Greenspan in the 90s, Warsh believes that when technology makes us more productive, the economy can grow faster without triggering inflation.
“The closest analogy that I have in central banking is Alan Greenspan in 1993 and 1994. The internet revolution was with us. He believed, based on anecdotes and rather esoteric data, that we weren’t in a position where we needed to raise rates because this technology wave was going to be structurally disinflationary. A lot of his peers at the Federal Reserve, and certainly in the academic profession and economics said: 'Oh, the economy is overheating. You need to get going and raise rates. This will be inflationary.' And he sat on his hands and he persuaded his colleagues to be patient. As a result, we had a stronger economy. We had more stable prices and we had greater U.S. competitiveness," said Warsh.
In other words, if there’s an AI productivity boom, Warsh won’t be afraid to cut rates.
Also, it’s important to know that despite the carnage in precious metals, rate cut odds actually increased after Warsh was announced as Jerome Powell’s replacement at the Fed.
More . . .
------------------------------------------------------------------------------------------------------
Only $1 for AI Stock Access
Artificial Intelligence (AI) is expected to skyrocket from $40 billion to $1.3 TRILLION in revenue in 10 years, igniting many tech stocks along the way. You can be among the first to Zacks' newest stock that will be revealed Monday morning.
A Zacks Rank #1 (Strong Buy), it quietly sits at the center of the AI arms race, powering everything from hyperscale data centers to next-gen networking chips. This cash-gushing giant is one of the most consistent earnings growers on Wall Street and shares have entered a high probability reward to risk zone.
Special opportunity ends at midnight Sunday, February 8.
Start Access Now for $1 >>
------------------------------------------------------------------------------------------------------
Investing Legends Back Warsh
Stanley Druckenmiller has long been a critic of the Federal Reserve and President Donald Trump.
However, Druckenmiller, the most consistent money manager of his time, has glowing words for Trump’s Fed pick, saying:
“The branding of Kevin as someone who’s always hawkish is not correct. I’ve seen him go both ways. I could not think of a single other individual on the planet better equipped.”
Meanwhile, hedge fund manager Ray Dalio echoes the positive sentiment, saying:
"Kevin Warsh was a great choice. We who have been engaged with policymakers and markets for a long time know him and respect him for his capabilities and judgement. He is knowledgeable and a reasonable man who understands the risks of having a Fed policy that is too easy as well as too tight and how to judge what’s too easy and what’s too tight. Presumably, he also knows how to deal with the president and the Treasury well.”
A Massive Injection of Cash
There are a few "stimulus" triggers sitting right in front of us for 2026:
• The Reopening Effect: Remember that 43-day government shutdown? Lutnick reckons it shaved 1.5% off GDP. With the government back in gear, that drag disappears.
• The Defense Surge: Trump is eyeing a $1.5 trillion defense budget (a 40% jump). That’s a lot of capital flowing into companies like Lockheed Martin (LMT) and drone tech like Red Cat Holdings (RCAT).
• The "Tariff Dividend": There’s talk of taking tariff revenue and sending it directly to Americans. Combine that with what's expected to be the largest tax refund in U.S. history, and you’ve got a consumer base with a lot of extra "dry powder."
Putting It Altogether...
Between a friendlier Fed, an AI-driven productivity spike, and a massive defense spend, the "Goldilocks" scenario for 2026 is looking more plausible by the day.
Top Market Moves to Watch Right Now
One of the strongest trends in the market is the rapid expansion of Artificial Intelligence, driving a lot of the momentum in the tech sector.
This trend could be extremely lucrative for both shorter-term traders and long-term investors, while AI accelerates and moves through its stages—infrastructure, tools and models, and application and productivity.
Today, I invite you to look inside the portfolio I'm managing, Zacks Technology Innovators.
We don't nail every pick but have recently closed winners like +76.2%, +118.8% and even +211.3% in just 2 months.¹
And we’re expecting more outsized gains in the months ahead.
In fact, I'm about to add a stock to the portfolio that has exceptional upside.
A Zacks Rank #1 (Strong Buy), it quietly sits at the center of the AI arms race, powering everything from hyperscale data centers to next-gen networking chips. This cash-gushing giant is one of the most consistent earnings growers on Wall Street and shares have entered a high probability reward to risk zone.
You can be among the first to see this fresh pick and get aboard when it's posted Monday morning. Plus, you'll also have the chance to immediately access all the live picks inside the Technology Innovators portfolio.
Bonus Report: When you check out our Technology Innovators portfolio, you may also download our Special Report, Beyond AI: The Quantum Leap in Computing Power.
As AI reshapes industries, quantum computing promises to redefine the very limits of computational possibility. This Special Report explores the cutting-edge developments in this emerging field and reveals 7 key stocks positioned to benefit from the radical technology.
Don't wait. The total cost to see all Zacks tech stocks (and other recommendations) for 30 days is an astonishing $1. There's not a cent of further obligation. The deadline for this unique opportunity is midnight Sunday, February 8.
Click for $1 Stock Access and Bonus Special Report >>
All the Best,
Andrew Rocco
Andrew is Zacks' technology stock strategist. His passion is making money on stocks and providing education with valuable insights from both a fundamental and technical perspective. He invites you to explore his Technology Innovators portfolio.
¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. Access grants you a comprehensive list of all open and closed trades.
Image: Bigstock
Why 2026 is Gearing Up for an Unprecedented Economic Run
If you’ve been watching the headlines, you understand that the U.S. economy is currently defying the usual gravity.
While growth for an economy of this size is typically modest, a perfect storm of policy shifts and tech breakthroughs suggests 2026 could be a record-breaker.
The Momentum is Real
The Atlanta Fed’s GDPNow—the "real-time" speedometer of the economy—is currently projecting a respectable 4.2% expansion for Q4 2025.
Looking forward, U.S. Commerce Secretary Howard Lutnick is even bolder, suggesting we could see 5–6% growth in 2026.
For a country as large as the U.S., those aren't just solid numbers; they’re historic.
But how can the U.S. achieve such growth?
A Changing Guard at the Fed
The biggest story for your 2026 outlook is the leadership change at the Federal Reserve.
With Jerome Powell’s term ending in May, President Trump has tapped Kevin Warsh to take the reins.
Wall Street Misinterprets Warsh as a “Hawk”
While some on Wall Street fear Warsh is a "hawk" (which sent silver prices tumbling recently), his past comments paint a different, albeit, nuanced picture.
First, the charts on precious metals were vertical and due for a pullback regardless of who President Trump selected as the next Fed Chair.
Second, previous interviews suggest that like Alan Greenspan in the 90s, Warsh believes that when technology makes us more productive, the economy can grow faster without triggering inflation.
“The closest analogy that I have in central banking is Alan Greenspan in 1993 and 1994. The internet revolution was with us. He believed, based on anecdotes and rather esoteric data, that we weren’t in a position where we needed to raise rates because this technology wave was going to be structurally disinflationary. A lot of his peers at the Federal Reserve, and certainly in the academic profession and economics said: 'Oh, the economy is overheating. You need to get going and raise rates. This will be inflationary.' And he sat on his hands and he persuaded his colleagues to be patient. As a result, we had a stronger economy. We had more stable prices and we had greater U.S. competitiveness," said Warsh.
In other words, if there’s an AI productivity boom, Warsh won’t be afraid to cut rates.
Also, it’s important to know that despite the carnage in precious metals, rate cut odds actually increased after Warsh was announced as Jerome Powell’s replacement at the Fed.
More . . .
------------------------------------------------------------------------------------------------------
Only $1 for AI Stock Access
Artificial Intelligence (AI) is expected to skyrocket from $40 billion to $1.3 TRILLION in revenue in 10 years, igniting many tech stocks along the way. You can be among the first to Zacks' newest stock that will be revealed Monday morning.
A Zacks Rank #1 (Strong Buy), it quietly sits at the center of the AI arms race, powering everything from hyperscale data centers to next-gen networking chips. This cash-gushing giant is one of the most consistent earnings growers on Wall Street and shares have entered a high probability reward to risk zone.
Special opportunity ends at midnight Sunday, February 8.
Start Access Now for $1 >>
------------------------------------------------------------------------------------------------------
Investing Legends Back Warsh
Stanley Druckenmiller has long been a critic of the Federal Reserve and President Donald Trump.
However, Druckenmiller, the most consistent money manager of his time, has glowing words for Trump’s Fed pick, saying:
“The branding of Kevin as someone who’s always hawkish is not correct. I’ve seen him go both ways. I could not think of a single other individual on the planet better equipped.”
Meanwhile, hedge fund manager Ray Dalio echoes the positive sentiment, saying:
"Kevin Warsh was a great choice. We who have been engaged with policymakers and markets for a long time know him and respect him for his capabilities and judgement. He is knowledgeable and a reasonable man who understands the risks of having a Fed policy that is too easy as well as too tight and how to judge what’s too easy and what’s too tight. Presumably, he also knows how to deal with the president and the Treasury well.”
A Massive Injection of Cash
There are a few "stimulus" triggers sitting right in front of us for 2026:
• The Reopening Effect: Remember that 43-day government shutdown? Lutnick reckons it shaved 1.5% off GDP. With the government back in gear, that drag disappears.
• The Defense Surge: Trump is eyeing a $1.5 trillion defense budget (a 40% jump). That’s a lot of capital flowing into companies like Lockheed Martin (LMT) and drone tech like Red Cat Holdings (RCAT).
• The "Tariff Dividend": There’s talk of taking tariff revenue and sending it directly to Americans. Combine that with what's expected to be the largest tax refund in U.S. history, and you’ve got a consumer base with a lot of extra "dry powder."
Putting It Altogether...
Between a friendlier Fed, an AI-driven productivity spike, and a massive defense spend, the "Goldilocks" scenario for 2026 is looking more plausible by the day.
Top Market Moves to Watch Right Now
One of the strongest trends in the market is the rapid expansion of Artificial Intelligence, driving a lot of the momentum in the tech sector.
This trend could be extremely lucrative for both shorter-term traders and long-term investors, while AI accelerates and moves through its stages—infrastructure, tools and models, and application and productivity.
Today, I invite you to look inside the portfolio I'm managing, Zacks Technology Innovators.
We don't nail every pick but have recently closed winners like +76.2%, +118.8% and even +211.3% in just 2 months.¹
And we’re expecting more outsized gains in the months ahead.
In fact, I'm about to add a stock to the portfolio that has exceptional upside.
A Zacks Rank #1 (Strong Buy), it quietly sits at the center of the AI arms race, powering everything from hyperscale data centers to next-gen networking chips. This cash-gushing giant is one of the most consistent earnings growers on Wall Street and shares have entered a high probability reward to risk zone.
You can be among the first to see this fresh pick and get aboard when it's posted Monday morning. Plus, you'll also have the chance to immediately access all the live picks inside the Technology Innovators portfolio.
Bonus Report: When you check out our Technology Innovators portfolio, you may also download our Special Report, Beyond AI: The Quantum Leap in Computing Power.
As AI reshapes industries, quantum computing promises to redefine the very limits of computational possibility. This Special Report explores the cutting-edge developments in this emerging field and reveals 7 key stocks positioned to benefit from the radical technology.
Don't wait. The total cost to see all Zacks tech stocks (and other recommendations) for 30 days is an astonishing $1. There's not a cent of further obligation. The deadline for this unique opportunity is midnight Sunday, February 8.
Click for $1 Stock Access and Bonus Special Report >>
All the Best,
Andrew Rocco
Andrew is Zacks' technology stock strategist. His passion is making money on stocks and providing education with valuable insights from both a fundamental and technical perspective. He invites you to explore his Technology Innovators portfolio.
¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. Access grants you a comprehensive list of all open and closed trades.