Key Issues Facing the U.S. Economy in 2026

LootboxPhobia · 2026-02-20T13:41:42+00:00

Morgan Stanley analysts stated that the core issue for the U.S. economy in 2026 is whether the impact of trade flows on GDP has stabilized. They believe that trade fluctuations in 2025 have caused significant disruptions to economic data but expect clear signals to emerge in 2026. They also pointed out the need to pay attention to the structure of imports, suggesting that the overall role of trade in GDP growth will weaken.

LootboxPhobia

2026-02-20 13:41:42

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Investing.com - Morgan Stanley believes that the core issue for the U.S. economy this year is whether trade flows will continue to distort quarterly growth data or if the turbulence following “D-Day” has already passed.

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In a report to clients on Friday, analyst Michael Gapen wrote: “A key question for the U.S. economy in 2026 is whether trade flows will drive fluctuations in real GDP estimates or if the shocks to trade volume after ‘D-Day’ have ended.”

The bank states that trade volatility is a notable feature of 2025.

Gapen wrote: “Net trade reduced real GDP growth in Q1 2025 by 4.7 percentage points, added 4.8 percentage points in Q2, and increased by 1.6 percentage points in Q3. Based on our tracking estimates before the Bureau of Economic Analysis’s initial release of Q4 2025 U.S. GDP data, we estimate that net trade contributed 0.1 percentage points in the fourth quarter.”

Gapen believes that if volatility persists, GDP will still be a “noisy signal.” But he added, “Our view is that the volatility has largely passed, and GDP should provide clearer signals in 2026.”

Morgan Stanley suggests that certain components of imports require closer examination. The bank noted that computer imports “remain strong due to AI spending,” while the surge in pharmaceuticals in early 2025 was driven by concerns over tariffs, “but these tariffs were not implemented.”

Gapen emphasized that non-monetary gold flows also distort overall import data but are not included in GDP.

Morgan Stanley states that after excluding these special factors, the correction from stockpiling in advance has ended, and import volumes “may indeed be slowing” in response to protectionism. Overall, the bank concludes that trade’s impact on real GDP growth in 2026 should be smaller than in 2025.

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