TD Securities projects that US economic output growth will remain sideways in 2026, attributing this trend to the ongoing effects of a previous oil shock and the potential stagflationary risks arising from the Iran conflict [1]. The firm forecasts US GDP growth to end 2026 at 2.1% on a Q4/Q4 basis, which is described as slightly below trend [1]. Unemployment is expected to remain relatively low, with a projected rate of 4.2% by the fourth quarter of 2026 [1].
The report highlights that the Iran conflict introduces stagflationary risks, which could influence the Federal Reserve's policy stance. Specifically, TD Securities anticipates that these risks will prompt the Fed to keep interest rates unchanged for the entire year [1]. Additionally, the bank assigns a 25% probability to a US recession occurring over the next year, reflecting ongoing economic uncertainties [1].
No specific market reactions or analyst opinions beyond TD Securities' outlook are mentioned in the article. The analysis focuses on macroeconomic projections and the potential impact of geopolitical events on US growth and monetary policy [1].
CONCLUSION
TD Securities expects US growth to remain subdued in 2026 due to persistent oil shock effects and stagflationary risks from the Iran conflict. The firm sees a stable but slightly below-trend economy, with the Fed likely to maintain its current policy stance throughout the year.