Wall Street is flying blind into 2026
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On Wall Street, outlook season has arrived, when strategists make calls on how the market will perform in 2026.
Why it matters: Those calls are now coming due after a six-week government shutdown without jobs reports or inflation data.
- Lacking clarity on the economy, it will be harder to form a high-conviction view on where the market is heading next year.
What they're saying: "I feel like we're all going to write our outlooks, and then there is going to be a version two that we publish in February," Kevin Gordon, head of macro research and strategy at Charles Schwab, tells Axios.
- Outlooks could shift "in a pretty major way once we figure out how everything actually looks," he adds.
Zoom in: The labor market was on shaky ground even before the shutdown.
- Employment data could change more quickly than perhaps inflation data in this environment, says Josh Hirt, senior economist with Vanguard.
- He thinks labor data "could really surprise" the 2026 outlook, especially if there was a lot of weakening in the last two months amid the shutdown.
Zoom out: It may also affect forward-looking macro data, like the GDPNow forecast, says Michael Metcalfe, head of macro strategy at State Street.
- "I think doing the quarterly GDP forecast right now is incredibly difficult," he says. "Your GDP is going to be incredibly choppy."
Reality check: There is "no major discontinuity" between the private and public data, Gordon of Schwab contends.
- For example, inflation data from the private firm PriceStats has been over 80% in line with official BLS inflation numbers over the past five years.
- Federal Reserve chair Jerome Powell recently name-checked Price Stats as one of the many private sources of information used by the central bank.
- State Street just acquired the firm.
State of play: It is not as if there was much certainty when the public data was flowing either.
- We were already in an environment where "assessing where true ground level is was a bit more challenging," Hirt says, as continued policy changes regarding tariffs, immigration and more have led to elevated uncertainty.
- The policy uncertainty index tracked by the St. Louis Fed spiked in the shutdown, though it has come down as the government now reopens.
The bottom line: Wall Street has to come up with an investment thesis on how 2026 is going to turn out without ever really knowing how 2025 went.
