Argus Research Projects Moderate U.S. Growth, Easier Rates and Ongoing Bull Market Through 2026

New York – Argus Research Company has issued four interrelated forecasts that outline its baseline view for the U.S. economy, interest rates, corporate earnings and equity market performance in 2026. The firm’s top-down framework starts with macroeconomic conditions and works down to individual equities, offering investors a broad roadmap for the next two years.

1. Economy expected to expand near 2 percent

Argus anticipates that U.S. gross domestic product will rise about 2.0% in 2026, a pace viewed as sufficient to sidestep recession risk. The projection follows estimated growth of 1.9% in 2025 and 2.8% in 2024, roughly in line with the nation’s long-run potential.

Three factors underpin the outlook: a still-employed consumer base, steady corporate capital spending and a “responsive” Federal Reserve. Even if monthly nonfarm payroll gains slow to roughly 50,000 because of restricted labor-force expansion, Argus believes the jobless rate can stay within a 4.0%–4.5% band. Weekly unemployment claims, currently near 230,000, remain the key warning indicator; readings above 300,000 could push unemployment toward 5.0%, prompting additional policy support.

On the corporate side, capital expenditures and information-technology outlays climbed at double-digit rates in 2025. While Argus does not expect another double-digit jump, it sees spending keeping pace with the historical average near 4.5% as artificial-intelligence investment gains traction. Those flows are expected to offset softer trade, elevated mortgage costs and restrained federal outlays.

2. Slightly lower rates and a steeper yield curve

The firm looks for modest declines in short-term interest rates during 2026 and for the Treasury curve to preserve its recently restored upward slope. The Federal Reserve trimmed its federal funds target by 25 basis points at the most recent Federal Open Market Committee meeting, bringing the range to 3.50%–3.75%. That was the third reduction of 2025 and could be the last before Chair Jerome Powell’s term ends in May.

The central bank also signaled that reserve balances have fallen to an acceptable level and that it would resume purchases of shorter-dated Treasuries, measures designed to maintain liquidity. The Summary of Economic Projections implies one additional cut in 2026 and another in 2027, potentially lowering the funds rate to 3.0%–3.25%—about one percentage point above expected inflation.

Argus tracks more than 20 price gauges monthly and reports a pattern of easing goods inflation offset by sticky services costs. Shelter inflation, which carries a heavy weight in consumer-price baskets, has begun to cool, allowing policymakers to place greater emphasis on employment conditions.

At the long end of the curve, headline inflation and monetary policy are only part of the equation. U.S. sovereign debt equals roughly 120% of GDP, and heavy issuance can pressure yields. Conversely, the Fed’s decision to let assets roll off its balance sheet supports demand for longer-dated securities. After two years of inversion, the curve turned positive in late 2024; Argus expects it to steepen further in 2026 as policy rates fall and longer maturities hover near current levels.

3. Earnings growth and valuations remain constructive

Corporate profits advanced at a low double-digit rate in 2025, recovering from an earnings recession in 2022–2023. For 2026, Argus projects S&P 500 earnings from continuing operations of approximately $300, up from $270 this year.

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Third-quarter 2025 results showed mid-teens earnings growth, with more than 80% of companies exceeding consensus forecasts. Revenue expanded about 8%, and operating margins landed above the midpoint of their long-term 9%–14% range, indicating that firms have adapted to tariff regimes by reshoring supply chains and flexing variable costs.

Sector leadership is expected to remain concentrated in information technology and financials, with solid contributions from industrials and signs of stabilization in healthcare. Headwinds from energy and materials that weighed on 2024 results are projected to ease.

Valuation metrics suggest room for further equity appreciation without signaling a bubble. Argus’s Stock/Bond Barometer shows a 0.38-sigma equity premium, within its normal range around a small positive bias. The forward price-to-earnings ratio for the S&P 500 stands near 23, comfortably inside the 15–24 historical corridor. Other measures—price-to-book, dividend yield relative to Treasuries, price-to-sales, earnings yield versus bonds and the S&P 500-to-gold ratio—also sit within historical norms.

4. Bull market projected to extend, albeit at a slower clip

The current equity bull market began in October 2022 and has lifted the S&P 500 more than 90% despite inflation spikes, policy uncertainty, a credit downgrade and multiple geopolitical disruptions. Argus expects the advance to persist through 2026, though annual returns may not match the gains recorded during the first three years of the cycle.

Historical analysis of 13 post-World War II bull markets shows average gains of 164% over roughly 57 months. Recent cycles have tended to last longer and deliver higher cumulative returns, providing statistical support for a continuation of the present run if growth, inflation and earnings trends align with the firm’s base case.

Altogether, Argus Research’s 2026 scenario envisions steady economic expansion, slightly easier monetary conditions, rising corporate profits and valuations that remain within historical bounds—an environment the firm believes can sustain, but not necessarily accelerate, the ongoing bull market.

Crédito da imagem: Argus Research Company