What: Visa forecasts U.S. economic growth to accelerate to 2.7% in 2026, with consumer spending rising 2.8% in real terms and nominal spending maintaining a strong pace, despite demographic headwinds and a slowing labour market.

Why it is important: Diverging income growth and new tax policies will drive a split in consumer spending, with higher-income households fueling discretionary and luxury purchases, while lower-income groups remain focused on essentials and value.

Visa’s 2026 outlook anticipates U.S. GDP growth rising to 2.7%, up from 2.0% in 2025, supported by resilient consumer spending and a modest easing of inflation. Real consumer spending is projected to increase by 2.8%, with nominal growth holding steady at 5.2%. However, the report highlights a growing divergence in disposable income and spending patterns across income tiers, driven by tax policy changes such as the higher SALT deduction and untaxed overtime wages. Higher-income households, especially in the Northeast, are expected to see a significant boost in discretionary spending on travel, luxury goods, and wellness, while lower-income consumers will allocate most of their gains to essentials like groceries, housing, and healthcare. Inflation is forecast to ease but remain above the Fed’s 2% target, with labor market growth slowing due to demographic shifts and reduced immigration. AI investment is set to accelerate, driving productivity gains but also creating sectoral divergence and workforce disruption. The Federal Reserve is expected to cut rates three times in 2026, but the path to lower inflation and stronger lending will be uneven, with risks from tariffs, energy prices, and persistent inflation expectations.

IADS Notes: Visa’s 2026 forecast aligns with recent IADS analyses highlighting the resilience of U.S. consumer spending amid demographic headwinds and persistent inflation. The report’s emphasis on income divergence and the impact of tax policy changes echoes findings from NRF and Mastercard, which have noted a growing split between discretionary and essential spending. The acceleration of AI investment and its role in productivity gains is consistent with BCG and Bain’s 2025 research, which identified AI as a key driver of sectoral growth and operational transformation. The expectation of modest job growth and a challenging labor market reflects broader industry concerns about workforce shortages and the need for upskilling, as seen in recent IADS workforce strategy reports. Overall, Visa’s outlook reinforces the importance of monitoring regional and income-based spending trends, inflation risks, and the evolving impact of technology on retail and economic performance.

Visa’s 2026 U.S. annual economic outlook