USA
United States – Strong Economy
The economic outlook remains positive despite increasing monetary policy headwinds, and corporate earnings continue to be strong. Major investments in AI are driving economic activity, and the increased use of AI in business processes is leading to higher productivity. Higher inflation rates and interest rates are having a dampening effect on economic growth, and geopolitical risks (the U.S.-Iran conflict) remain present. We expect slightly higher volatility leading up to the midterm elections on November 3, followed by a positive market trend through the end of the year.
The Flash S&P Global US Composite PMI (Purchasing Managers’ Index for the service and manufacturing sectors) rose by a whopping 2.4 points to 58.4 in September 2026 compared to the previous month, according to preliminary calculations, marking a multi-year high. Both the PMI for the services sector (+2.2 to 58.7 points) and that for the manufacturing sector (+3.6 to 56.7 points) contributed to this growth. This 6-month leading indicator thus signals a further acceleration in economic growth compared to previous months. According to its July 2026 forecast for the U.S. economy, the IMF expects growth of 2.30% for 2026 and 2.20% for 2027.
Resilient Labor Market
In August, following a summer dip, 162,000 jobs were created outside the agricultural sector, indicating a resilient labor market. The unemployment rate remained unchanged from the previous month at a low 4.1%.
Monetary Policy Becomes More Restrictive
At its meeting on September 16, 2026, the Fed raised the federal funds rate by 0.25% to a target range of 3.75–4.00%. The decision was unanimous. In doing so, the new Fed Chair, Kevin Warsh, demonstrated his independence from the U.S. President—who has been vehemently calling for an interest rate cut—much to the general relief of the market. The market widely expects another 0.25% interest rate hike by the end of the year. There are good reasons for this. Inflation rose to 3.4% in August (+0.40% compared with the previous month), and core inflation (excluding energy and food prices) rose to 2.4% (+0.30%). As a result, inflation has remained above the Fed’s 2% target for quite some time.
Continued Strong Earnings Reports and Falling Valuations
For the second quarter of 2026, earnings reports from S&P 500 companies exceeded forecasts with an impressive 23% year-over-year increase. Expectations for third-quarter 2026 earnings are also well above the historical average, with growth projected at 29%. The current stock market valuation is thus supported by solid earnings growth. With an S&P 500 price-to-earnings ratio of 19.2 (based on analysts’ earnings estimates for the next 12 months), the market valuation has continued to decline in recent months and is now below the 5-year average of 19.8 but still slightly above the 10-year average of 19.0.
GDP 2026 (IMF): +2.30% (E)
Inflation 2026 (IMF): +3.20% (E)
Fed Funds Rate: +3.75–4.00%
Sources: Trading Economics, FuW, U.S. Bureau of Labor Statistics, Statista, IMF, FMOC
As of: September 29, 2026