Columbia Business School

Expect the Unexpected: A Blueprint for 2026

The CBS Spring 2026 Global Markets Update opened with senior scholar Brett House introducing Abby Joseph Cohen, a former Goldman Sachs chief US investment strategist, to dissect the economic and market landscape heading into 2026. The session, co‑hosted by the Chazen Institute and Columbia Women in Business, aimed to move beyond consensus forecasts and probe the forces shaping growth, inflation, corporate earnings and valuation. Cohen recapped 2025 as a modestly better year than expected, with real GDP expanding at roughly 2.5‑3 percent and inflation holding steady around 2.75 percent. Corporate profits remained robust, yet she warned that rising labor costs and lingering tariff effects could compress margins. On the equity side, the S&P 500 is priced near full valuation, leaving little cushion for upside and amplifying downside risk. She emphasized the “tails” of the probability distribution, noting that while the central outlook appears reasonable, the market is vulnerable to negative shocks. Cohen highlighted deregulation—particularly the SEC’s retreat from crypto oversight and the Fed’s relaxed bank supervision—as a potential repeat of pre‑GFC missteps that allowed sub‑prime excesses to build unchecked. "I don’t see much room for a positive surprise," she said, underscoring the limited buffer in current pricing. For investors and policymakers, the takeaway is clear: monitor fiscal deficits, geopolitical volatility, and the pace of deregulation. With valuations tight and systemic risks resurfacing, a disciplined, risk‑adjusted approach will be essential to navigate an uncertain 2026 landscape.