2026年的平衡之道：通货膨胀与增长报告（英文版）-William Blair

EquityResearch

Economics

December8,2025

RicharddeChazal

+442078684489

rdechazal@

EconomicOutlook2026GlassHalfFull:Positives>Negatives

LouisMukama

/p>

lmukama@

Pleaserefertoimportantdisclosuresonpages25and26.Analystcertificationisonpage25.

WilliamBlairoranaffiliatedoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asa

result,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Thisreportisnotintendedtoprovidepersonalinvestmentadvice.Theopinionsandrecommendationshere-indonottakeintoaccountindividualclientcircumstances,objectives,orneedsandarenotintendedasrecommen-dationsofparticularsecurities,financialinstruments,orstrategiestoparticularclients.Therecipientofthisreportmustmakeitsownindependentdecisionsregardinganysecuritiesorfinancialinstrumentsmentionedherein.

WilliamBlair

Contents

ClosingOutaYearofHeightenedUncertainty,WithRisingGrowthProspects 3

DomesticPolicyUncertaintyEases,ForeignPolicyRisksRemainElevated 4

SolidConsumerin2026WithHelpFromtheOBBB(andPotentiallyTariff

DividendChecks) 6

CapexMomentum:MoreThanJustDataCenters 12

Inflation:TheKeyVulnerabilityin2026 14

FedPolicy:LessRoomtoManeuverThanMarketExpects 16

LongRates:CouldBeForcedtoTakeUptheSlack 17

EquityInvestmentLandscape 19

Conclusion 24

2

RicharddeChazal+442078684489

WilliamBlair

ClosingOutaYearofHeightenedUncertainty,WithRisingGrowthProspects

OneWordtoDescribe2025—Uncertainty

ItisfairtosaythatPresidentTrumphasbeenthegreat“disrupterinchief”thisterm.IfPresi-dentClintonwasfamousforhisabilitytocompartmentalize,PresidentTrump’sinnate—andnodoubttactical—abilityseemstobeto“floodthezone,”inanefforttosimultaneouslypro-vokeanddestabilizehisopposition.Asaresult,economicpolicygaugesofuncertainty(exhibit1)in2025areattheirhighestlevelsince1900.Thankfully,webelievethisuncertaintywilldiminishin2026.

800

700

600

500

400

300

200

100

0

Exhibit1

U.S.EconomicPolicyUncertaintyIndex

(News-basedgaugeofuncertaintyacrossnationalmedia)

April2025

May-00May-10May-20May-30May-40May-50May-60May-70May-80May-90May-00May-10May-20ShadedAreas=Recessions

Sources:Baker,Bloom,andDavis

,WilliamBlairEquityResearch

SoManyGoals,soLittleTime

AlthoughTrumpisasecond-termpresident,thereisseeminglyastrongsenseofurgencytoachievetheadministration’sgoals,andtimeisfleeting.Thosegoalsstillequatetoreorderingtheglobaleconomicandfinancialtradingsystemtoreleveltheplayingfield;forcingNATOmemberstoacceleratedefensespendinginaccordancewiththeiragreement;generatingpeaceintheRussia-Ukraineconflict,asTrumpproducedaceasefireinIsrael-PalestineandsimmeredtensionswithIran;loweringgovernmentregulationandtaxes;increasingenergyproduction;andtighteningbordersecuritytoreduceillegalimmigration.

ThepresidentisalsoattemptingtoachievethesegoalsunilaterallybyslicingtheGordianknotinunconventionalways,includingattemptingtosqueezeeverybitofexecutivepowerhecantoavoidorcircumventinstitutionalhurdles—somuchsothattheSupremeCourtisnowconsider-ingwhethertoomuchcontrolhasbeenusurpedfromCongress(i.e.,thepowertoimposetaxesandraiserevenue).Whileanegativedecisionontariffsforthepresidentwouldbeasetback,it

RicharddeChazal+442078684489

3

WilliamBlair

4

RicharddeChazal+442078684489

seemshisadministrationwilllikelyfindalternatives.Themarket,however,couldviewsuchasetbackasapotentialpositivestimulusforgrowth—iftariffswereataxraise,areversalwouldbeataxcut.

Ironically,Trumpseemstohavehadtheleastsuccessintheoneareathatsharesthegreatestbipartisansupport:reducingfraud,waste,andabuse,whilereducingthesizeofthegovernmentandmakingitmuchmoreefficient.Unfortunately,thishaslargelybeenunsuccessful.ItwasalwaysthecasethatifDOGE’smandateincludedonlydiscretionaryspending—wheretherewasnotthatmuchwastetocut—itsscopeforsuccesswasincrediblylimited.

AIInvestmentBoomCountersPolicyUncertainty

Despitethisuncertainty,thefinancialmarketsandtheaggregateeconomyhavebeenresilient.Suchresiliency,however,wasinnosmallwayhelpedbytheunfoldingsurgeinAI-relatedinvest-ment,outsideofwhichcapitalinvestmentremainedweak.Theresultisthateconomicgrowththispastyearisexpectedtohaveincreasedby2.0%,supportedbyanestimated2.5%increaseinconsumerspendinganda4.0%riseinnonresidentialbusinessfixedinvestment.Atthetimeofwriting,theS&P500hasrisenby17%year-to-date,thoughtheequal-weightedindexisupjust9%.Earningsgrowththispastyearisalsoestimatedtohaveincreasedby12%,withmorethanathirdofthatincreasedrivenbytechnologyandcommunicationservices.

PositionedforEconomicGrowth

Lookingtoward2026,despitesomemountingtrepidationaboutthelabormarket,itisquitelikelythateconomicgrowthwillbroadenandpossiblyaccelerate,butwiththecorollaryofstillhighin-flation.Growthwillbedrivenbyacombinationoffiscalandmonetarystimuli;consumerspendingsupportedbythebenefitsfromtheOneBigBeautifulBillAct(OBBB);andcontinuingAI-relatedcapitalinvestment,includingintheenergysector.Additionaldriversincludeamanufacturingsec-torthatisemergingfromathree-yearrecession,deregulationacrossthefinancialsectorandpo-tentiallyhousingaswell,andareductionintheuncertaintythathascausedmanycompaniestodelayand/orreducecapitalexpendituresin2025.

Still,stickyorpotentiallyacceleratinginflationislikelytoresultinfewerratecutsthanthemarketcurrentlyanticipates.Andthemainrisksfortheoutlookcenteronfinancialmarketvolatility,thepotentialforrisingunemployment,andgeopoliticaltensions.

DomesticPolicyUncertaintyEases,ForeignPolicyRisksRemainElevated

TheheighteneddegreeofdomesticpolicyuncertaintyemanatingfromtheWhiteHouseoverthepastyearshouldeasethrough2026,althoughforeignpolicypressureislikelytobemaintained.TheshockandawefromthemostcontroversialpoliciesontheTrumpplatform(e.g.,tariffs,DOGE,anddeportations)havealreadylargelybeeninstigated,withmanyofthesepoliciesnowinconsoli-dationmodeorstartingtogetboggeddownbyopposition.

Historically,followingthemidtermelections,second-termpresidentsfindlesstractionondomes-ticpolicy(havingalreadypushedtheirdomesticagenda)andtendtoturntheirfocustowardfor-tifyingtheirlegacy,embarkingonforeigntravel,andachievingnon-domesticpolicyobjectives,wheretheyretainarelativelyfreehand.WeexpectPresidentTrumptocontinuetofollowthistrendwithhiscontinuingeffortstocounterChineseeconomicandmilitarypowerandremodeltheglobaleconomictradingsystemtowardhisworldview.

WilliamBlair

5

RicharddeChazal+442078684489

Headingintothe2026midtermelections,RepublicanswilldefendaslimmajorityintheHouseofRepresentativesandalarger,thoughstillnarrow,edgeintheSenate.One-thirdoftheSenateandalltheHouseseatsareupfor(re)election,raisingtheprospectofasplitCongressduringthefinaltwoyearsofPresidentTrump’sterm.Historically,midtermsserveasareferendumonthein-cumbentpartyintheWhiteHouse,whichalmostalwayslosescongressionalseats.Atpresent,theDemocratsseemtohaveanotheradvantage.AccordingtoRealClearPolitics,PresidentTrump’sapprovalratingrecentlyfellto42.3,itslowestpointsinceheleftofficefollowingtheJanuary6,2021,Capitolattack,whenitstoodat41.1%(exhibit2).ThecurrentTrumpadministrationhasfacedstrongoppositiononseveralpublicpolicyfronts,andDemocratswillharnessthatdiscontenttomobilizetheirbaseandappealtoswingvoters.

ThoughsentimentcouldshiftbetweennowandNovember2026,currentelectoralratingsandpredictionmarketssuggestRepublicanswilllikelyretaincontroloftheSenate,whileDemocratshaveastrongchanceofflippingtheHouse.

75

70

65

60

55

50

45

40

35

30

25

Exhibit2

RCPPresidentTrumpJobApprovalandFavorability

AverageofNationalPollingData,%

January20,2025Startof2ndTerm

Approve

January20,2021Endof1stTerm

DisapproveFavorable

Unfavorable

Recentlow,

42.3,

on11/14/2025

Lowestat37on12/13/2017

41.1

Endof1stTerm

27-Jan-1727-Jan-1827-Jan-1927-Jan-2027-Jan-2127-Jan-2227-Jan-2327-Jan-2427-Jan-25Sources:RealClearPolitics,WilliamBlairEquityResearch

WilliamBlair

6

RicharddeChazal+442078684489

SolidConsumerin2026WithHelpFromtheOBBB(andPotentiallyTariffDividendChecks)

IncontrasttothecurrentmarketnarrativeforacollapsingK-shapedconsumer,weseeascenariowheretheaggregateconsumerremainsrelativelysolidin2026,withapaceofspendinggrowthroughlyinlinewith,ifnotabove,theestimated2.5%pacein2025.Consumersarecurrentlyexpe-riencingrobustrealwagegrowththatisstillabovethehistoricalaverage(exhibit3).

Exhibit3

RealAverageHourlyEarningsGrowth

(%ChangeonYearAgo)

8

6

Recessions

RealAverageHourlyEarnings

Earningsgrowthturnspositive

4

againinMay2023

2

0

-2

Cushionedbypandemicrelief&excesssavings

-4

Mar-07Mar-09Mar-11Mar-13Mar-15Mar-17Mar-19Mar-21Mar-23Mar-25

Sources:BureauofLaborStatistics,WilliamBlairEquityResearch

Wagegrowthforthelowestincomequartile(thelowerlegoftheK)hasdeceleratedsharply,thoughthisfollowsanunprecedentedpandemic-relatedsurgeoverthelastfewyears.Growthto-dayisstillpositiveinrealterms,butbelowthehistoricalaverage.Meanwhile,thehighestincomecohort(thetopoftheK)isstillbenefitingfrombothwell-above-averagerealwagegrowthandanappreciationofassetwealth,astheownersofbothrealestateandfinancialassetswhosevalueshavebeenrising(exhibit4).

WilliamBlair

7

RicharddeChazal+442078684489

8.007.006.005.004.003.002.00

1.000.00-1.00

Exhibit4

AtlantaFed'sWageGrowthTrackerbyQuartile

(12-monthmovingaverageofmedianpercentchangeinthehourlywageofindividuals

observed12monthsapartbywagequartile)

PCEPriceIndexRecession

1stQuartile2ndQuartile3rdQuartile4thQuartile

Dec-05Dec-08Dec-11Dec-14Dec-17Dec-20Dec-23Dec-26

Sources:AtlantaFed,WilliamBlairEquityResearch

Aswemoveinto2026,householdswillalsoreceiveahelpfulboostfromtheOBBB,intheformofsignificanttaxrefundsfollowingthosechangestotaxlegislationin2025.ThisincludestheOBBB’sremovaloftaxesontips,onovertime,andonautoloaninterestpayments.Childcaretaxcreditswerealsoincreased,aswerethecapsforSALTdeductions.

AsdiscussedbyDylanCarden,

ourfellowresearchanalystfromtheconsumerteam,thesebenefitswillbebroad,butnotasbroadaathe$7,300inrebatechecksthatwereissuedbetweenMarch2020andMarch2021to170millionindividuals,withthelargestupfrontbenefitgoingtothelowest-incomehouseholds.Consumersareexpectedtoreceiveaweightedaveragepayoutthatcouldbeashighas$700.

Furthermore,thesebenefitscouldbesupplementedbyanotherroundofstimuluschecks.TheTrumpadministrationhasproposedso-called“tariffdividend”checksof$2,000,whichwouldbeissuedtoworkerswithincomeslessthan$100,000.However,anysuchstimuluswouldrequireavoteinCongress,andifpassed,theamountwouldlikelybelowerthan$2,000.TheirissuancecouldalsodependontheSupremeCourt’sdecisiononthelegalityofthetariffsthemselves.

WilliamBlair

8

RicharddeChazal+442078684489

HouseholdsinGoodStanding

Wideningthescopealittle,wecontinuetoseetheaggregateconsumerasinrelativelygoodshapeandresilientin2026,eventhoughhigherinflationwillcontinuetoweighonfamilyfinances.Bal-ancesheetsarefarfrombeingstretched,andincomegrowthcontinuestoeasilyoutpacedebtgrowth(exhibit5).

14.0

12.0

10.0

8.0

6.0

4.0

2.0

0.0

Exhibit5

GrowthinHouseholdDebtvs.NominalDisposableIncomeAnnualRateofChange,10-YearMovingAverage,%

Incomegrowth>

DebtGrowth

DebtGrowth>incomegrowth

Recessions

HouseholdDebt

DisposablePersonalIncome

Mar-62Mar-67Mar-72Mar-77Mar-82Mar-87Mar-92Mar-97Mar-02Mar-07Mar-12Mar-17Mar-22

Sources:FederalReserve,WilliamBlairEquityResearch

Suchlowdebtratiosmeanthathouseholdsarebetterplacedtomanageanypotentialweaknessthanwasthecasefollowingtheglobalfinancialcrisis,whentheynotonlylosttheirjobs,butalsowerecarryingfarhigherlevelsofdebt,whichmanywereforcedtodefaulton.Thisdebtdeleverag-ingturnedwhatcouldhavebeenamildrecessionintoamajorfinancialcrisis.Forboththecor-porateandhouseholdsectors,thelowerdebttheyarecarryingtodaymeanstheywouldbebothmorereceptiveandresponsivetolowerinterestratesiftheneedarose.

EmploymentOutlook

Inaddition,thelabormarketisstructurallytight.Anagingworkforce,lowerbirthrates,deglobal-ization,andanti-immigrationpoliciesarecombiningtoshrinkthepoolofavailablelabor,withtheresultthatcompaniesaremorereluctanttoshedworkerswhohavebeensohardtofindinthefirstplace.Thisstructuraltightnessisalsoactingasamajordriverofwhatweseeasanunfoldingproductivityboom,aidedandabettedbytheAIinnovationwave.

Thisstructurallabormarkettightnessisshowingupinalaborforceparticipationrateforprime-agedworkersstillhoveringnearthehighsofthelate1990s.Thisiseffectivelytheoppositeofthehysteresisimpactwewitnessedpost-GFC,whenworkersremainedunemployedforlongerbecausetheylosttheirskills,confidence,andcontacts.Highlevelsofparticipationtodayarethere-foreencouragingandwouldbeconsistentwithbothshorterdurationsofunemploymentandalowerunemploymentrate—ineffect,wecouldbeexperiencingsomereversehysteresis.

WilliamBlair

9

RicharddeChazal+442078684489

Exhibit6

LaborForceParticipationRateforPrimeAgeWorkers,%

85.0

84.0

83.0

82.0

81.0

80.0

79.0

78.0

25-54YrsOlds,SeasonallyAdjusted

Recessions

25-54

Dec-79Dec-84Dec-89Dec-94Dec-99Dec-04Dec-09Dec-14Dec-19Dec-24Sources:BureauofLaborStatistics,WilliamBlairEquityResearch

Householdsin2026aremostatriskfromthreemainareas.

1.IfCongressdecidednottoextendthehotlydebatedenhancedpremiumtaxcreditsfortheAffordableCareAct,whichareduetoexpireonDecember31.Ifthisprovisionisnotex-tended,premiumsaresettospikeforanestimated22millionenrollees.MembersofCongresshaveagreedtocometoasolutionforthesebymid-December,andtwobillsarealreadyinplaytoresolvethisissue.ManymembersoftheGOP,includingthepresident,wouldprefertodi-rectpaymentstoconsumersorhealthsavingsaccounts.Democrats,however,wouldpreferacleanextensionandforpremiumstobemadepermanent.Failuretopassanextensionwouldseepremiumsmorethandoublefromcurrentlevels,whichwouldactasasignificantdragonconsumptionandtangiblychangetheeconomicoutlookfor2026.

2.Anysharpcorrectionsinthestockmarket,wherehouseholds’exposuretotheequitymarketasashareoftotalfinancialassetshasneverbeenhigher(exhibit7).Wehavealsobeenseeingevidenceofawealtheffectplayingout,wherebythebeneficiariesofthisappreciationarein-creasinglytreatingunrealizedcapitalgainsas“banked”savings,allowingthemtolowertheiractualrate(andlevel)ofsavings.

WilliamBlair

10

RicharddeChazal+442078684489

Exhibit7

HouseholdDirect&IndirectHoldingsofEquitiesasShareofTotalAssets,%

30

25

20

15

10

5

Dec-51Dec-57Dec-63Dec-69Dec-75Dec-81Dec-87Dec-93Dec-99Dec-05Dec-11Dec-17Dec-23Sources:FederalReserve,WilliamBlairEquityResearch

3.Ifrecentsofteninginthelabormarketturnstowidespreadlayoffs.Trendsinthelabormarketoftenfeedonthemselves,wheresomelayoffsbegetmorelayoffs.However,itishardtoseewhatthecatalystforthismightbeinthefaceofthestructurallytightlabormarketandstrongearningsgrowth,inadditiontotheanticipatedboosttoconsumerincomesthroughthefirsthalfof2026.

WhatAbouttheLaborThreatFromAI?

Listeningtocommentsfromthecorporatesectorduringthelatestearningsperiods,aswellasexaminingtheavailableemploymentdata,suggeststhatmuchofthesofteningwehaveseeninemploymentgrowthhasbeenduetothecombinationofamorelimitedsupplyofworkersandtheuncertaintyrelatedtofiscalpoliciescomingoutofWashington,withseeminglylittleyetduetoAI.

Furthermore,theproductivitygrowthweareseeingtodayalsolookstobemorerelatedtopost-COVIDcapitaldeepening,whichcompaniesundertookwhenworkersstayedhomeduringthere-strictions.Exhibit8,forexample,showsthatAIadoptionratesarestillaslowas10%,andmanyofthecompaniesthatareadoptingAIare(forthemoment)doingsotoworkalongsideworkers,ratherthantoreplacethem.

WilliamBlair

11

RicharddeChazal+442078684489

Exhibit8

AIUse-NationalAverage,%

20%

15%

10%

5%

0%

25%

CurrentAIUse(LastTwoWeeks)

ExpectedAIUse(Next6Months)

15.3%

10.4%

Sep-23Nov-23Jan-24Mar-24May-24Jul-24Sep-24Nov-24Jan-25Mar-25May-25Jul-25Sep-25Nov-25Jan-26Sources:CensusBureau,WilliamBlairEquityResearch

Itisalsoworthhighlightingthatthereislittlehistoricalevidenceshowingproductivity/innovationboomstobethedirectcatalystforaneconomiccollapse,eventhoughtheycanbehighlydisruptiveacrossimpactedindustriesandindirectlyledtothe2001recession,duetotheirrationalexuber-ancethatbuiltupinthestockmarketanditssubsequentbust.

AnexamplethatcouldholdsomesalientlessonsfortodayisEngels’pausefromaround1790to1840inBritain.Intheearlystagesoftheindustrialrevolution,GDPpercapitarosesharplyyetcon-sumptionstagnated.Duringthisperiod,despiterisingproductivitygrowth,workers’realwageswereflat—i.e.,theownersofcapitalcapturedtheprofitsbeingcreatedratherthantheworkers,increasingsocietaltensionsthoughnotcausingarecession.

ThereisafeartodaythatthisscenariocouldplayoutagaininthecomingyearsaswemovefromtheenablingphaseoftheAIrevolutiontotheadoptionphase(exhibit9).Governments,asare-sult,willclearlyneedtowatchthisclosely.However,therearealsomanydifferenceswithtoday’sscenariocomparedtothispastepisode,includingthefactthatworkers’rightsbarelyexistedthen;thespeedofadoptionandknowledgetransferisfarfastertoday,whichshouldhelpreduceanylagbetweenproductivitygainsandwagegrowth;and,whileAIprimarilyaffectscognitiveandroutinetasks,itisalsolikelytocreatenewhigh-skilledjobsandindustriesfarfasterthanhistoricalindustrializationdid.

WilliamBlair

12

RicharddeChazal+442078684489

Exhibit9

S&P500OperatingMarginsEmployment+JobOpenings

S&P500OperatingMarginsvs.LaborDemandGrowth,%

18

17

16

15

14

13

12

11

10

9

8

Recessions

S&P500OperatingMargins

LaborDemand(TotalEmployment+JobOpenings,%Chg.YoY)

EmergingEngels'Pause?

10.0

5.0

0.0

-5.0

-10.0

Dec-01Dec-03Dec-05Dec-07Dec-09Dec-11Dec-13Dec-15Dec-17Dec-19Dec-21Dec-23Dec-25Sources:Bloomberg,BureauofLaborStatistics,WilliamBlairEquityResearch

CapexMomentum:MoreThanJustDataCenters

Weexpectcorporatecapitalexpenditurestoremainelevatedthrough2026,supportedbyAIandrisingenergydemand,inadditiontoabroadeningofcapitalinvestmentacrosstheeconomy.Thismomentumislikelytobesupportedbyrecentpresidentialexecutiveactionsandtaxin-centivesincludedintheOBBB,whichtangiblylowereffectivecorporatetaxratesforcapital-intensivebusinesses.Inaddition,thepushtoreshoremanufacturingandsecurecriticalsupplychainswillalsorequiresignificantupfrontcapitalinvestment.

SincethereleaseofChatGPTandsimilartools,datacenterconstructionspendinghassurgedtonearly$40billionannually,morethantriplethefiguresreportedinlate2022(exhibit10).In2014,datacenterprojectsrepresentedroughly5%ofallofficeconstruction,buthavenowincreasedtomorethan40%.

Estimates

fromMcKinseyindicatethatglobalcompanieswillneedtoinvestafurther$5trillion-$7trillioninthecomingfiveyearstomeetAI-industrydemands.

WilliamBlair

13

RicharddeChazal+442078684489

$160,000

$140,000

$120,000

$100,000

$80,000

$60,000

$40,000

$20,000

$0

Exhibit10

ValueofPrivateConstructionPutinPlaceforSelectStructures

(Millions,SAAR)

Recession

DataCenters

PowerIncludingOilandGas

Manufacturing:ComputersandElectronicsandElectrical

Jan-14Jan-15Jan-16Jan-17Jan-18Jan-19Jan-20Jan-21Jan-22Jan-23Jan-24Jan-25Jan-26Jan-27Sources:CensusBureau,WilliamBlairEquityResearch

DataCentersandBeyond

TheboomingenerativeAIandadvancedmodelshascompelledcompaniestorapidlyscaletheirphysicalinfrastructure,purchasethelatestchips,andsecurereliableenergysourcestosustainthepower-intensivesystems.AI-relatedcapitalexpenditurehasbeenamajordriverofeconomicgrowththisyear,yetoverallspendingstillfallsshortofthelevelsduringthelate-1990stechboom.Unlikepastinfrastructurebooms,thisinvestmentcycleisshorterlived,fastdepreciating(withchipsneedingtobereplacedeverytwotothreeyears),anddependentoncontinuoushardwareupgrades.Thesewouldsuggestthatthedatacenterbuildoutisstillrampingupand2025isnotthepeak.

Constructionisalsoboomingbeyondjustdatacenters,withmorecapitalflowingintocomputerandelectronicsfactoriestodaythanallothermanufacturingfacilitiescombined(exhibit10).ThisalongsidegrowinginvestmentinpowergenerationsuggeststhatfocusingsolelyondatacenterswouldunderestimatethetotaleconomiceffectsofAI-relatedcapitalexpenditure.

TheNeedforPower

Asoutlined

here

byourcolleaguesJedDorsheimerandNealDingmann,upgradingthepowergridiscritical,asexistingcapacityalonecannotmeettheenergy-hungrydatacenterpowerneeds.Hyperscaledemandwillgrowwithrisingcomputerequirements,butlimitedtransmis-sioninfrastructureandgridinterconnectioncapacityremainmajorconstraints.Thisispushingconstructiontowardregionswithexistinginfrastructureandabundantnaturalgas.Ifthesectorinsistsonpoweringallworkloadswithgreenenergy,itwilllikelyhavetoscalebackitsAIambi-tions,withnaturalgas—andincreasinglynuclear—providingthereliablecapacityneededinthenearterm.

WilliamBlair

14

RicharddeChazal+442078684489

StrongEarningsandLessUncertainty

Lastly,thecombinationofcontinuedstrongearningsgrowthanddiminishedpolicyuncertaintyaswemoveawayfromtheinitialshock-and-awephaseofthefirstyearoftheTrumpadministrationshouldalsohelpsupportacontinuedbroadeningoutofcapitalinvestment(exhibit11).

mnRecessions

RealNonresidentialBusinessFixedInvestmentS&P500EPSGrowthRate12MthTrailingEPS

mmoI/B/E/SEstimates

25

20

15

10

5

0

-5

-10

-15

-20

-25

Exhibit11

BusinessInvestmentandEarningsGrowth

S&P500EPS12MonthsRollingvs.RealBusinessFixedInvestment,%ChangeYoY

60

BusinessInvestmentEPSGrowth

40

20

0

-20

-40

-60

Oct-05Oct-08Oct-11Oct-14Oct-17Oct-20Oct-23Oct-26

Sources:LSEGI/B/E/S,WilliamBlairEquityResearch

Inflation:TheKeyVulnerabilityin2026

Thistimelastyear,inflation(CPI)wasexpectedtofallfrom2.9%to2.5%bytheendoftheyear.Thathasnothappened.Inflationisstillstuckat3.0%.Whilesomeofthiscanbeblamedontariffs,therealityisthattheinflationarytariffimpacthassofarbeenrelativelylimitedasmanycompa-nieshavefoundwaystomitigatepassingpriceincreasesontotheend-consumer.Rather,thestickyinflationisalsobeingdrivenbyacombinationofstillsolidaggregatedemand,shelterpricesthathavedeceleratedlessrapidlythanenvisioned,andgoodspricesthatarenolongerdeflationaryduetostructuralchangestothesupplysideoftheeconomy.

Whilewebelievethattheinflationregimehasnowchangedtoonewherepricinghasbecomemuchmoresusceptibletosupply-sideshocksthanovertheprevioustwodecades,disaggregateddatafromtheSanFranciscoFedintosupplyanddemandbucketsshowsthatrecentcyclicalpricestickinesslookstobedrivenmorebydemand-sidefactorsthansupply(exhibit12).Ifthisreallyisthecase,itwouldbeconsistentwithlessroomforfurtherFedeasingin2026andalsohelpsupportthemorehawkishstancebei