AMG’s economic outlook helps identify opportunities for investors in the years ahead.

Financial markets are often explained through past cycles and events, but history is a reference point, not a roadmap. While the past can offer valuable context, identifying future opportunities can provide a path.

Successful investment management requires a portfolio that is built around an individual’s unique circumstances and integrated with an overall wealth management plan. The groundwork to reach that point begins with an understanding of global economic conditions, risk assessment, and research-based asset allocation.

AMG’s Economic Outlook

Annually, AMG develops its economic and market outlook for the coming three years and uses this insight on economic conditions and potential opportunities to design investment portfolios. In January 2026, AMG’s most likely scenario, or Base Case, reflects an economy that is “muddling through” on a steady—if unspectacular—path for the U.S. economy through 2028, despite recent turbulence.

AMG anticipates the recent economic slowdown ending this year due to recent interest rate cuts (nearly two percentage points over the last 18 months) and fiscal support from the One Big Beautiful Bill Act (OBBBA). Together, these policies might help balance the labor market and keep economic growth near its potential, estimated at around 2% per year. Increasing investment in data centers should also help the economy grow at a rate close to potential.

Over the next three years, according to the Base Case, GDP growth is anticipated to remain close to its potential rate, unemployment to stay stable, and household incomes to gradually rise—all fueling consumer spending. Lower interest rates and ongoing advances in artificial intelligence (AI) technology could also drive investment. However, AMG’s Base Case notes that slower labor force growth—partly due to reduced immigration—might slightly temper the economy’s potential.

What if events turn out better than expected? An “AI Boom” scenario envisions significant waves of innovation from AI, higher GDP growth, and job creation more than offsetting jobs displacement.

Possible Areas of Opportunity?

The capital expenditure boom around everything related to AI has been and likely will continue to be a huge driver of large cap U.S. equities for some time. However, the combination of fiscal policy, with the OBBBA promoting reindustrialization, and monetary policy reducing interest rates appears to have created a cyclical earnings growth opportunity that might allow small, mid, and foreign stocks to outperform large cap stocks over the next couple of years.

The expected environment of the next couple of years reminds us to maintain diversified portfolios.

View a replay of our recent webinar for AMG experts’ forward-looking outlook on the economy and markets. Learn more about AMG here.

AI and Avenues Ahead

While AI often is referred to as a single, sweeping development, like other advances in history, it actually can be looked at in phases. During gold rushes, it is said that the merchants who sold picks, shovels and other supplies often fared better than many of the miners who laid stakes to land. Today’s equivalent to those miners would be the companies building data centers and AI models. In the next phase, the picks and shovelers will be providing semiconductors, access to cloud infrastructures, connectivity, and rare earth minerals vital to AI’s continued momentum.

History reminds us that innovation creates opportunity—but it also brings volatility. Not every miner struck gold, and not every supplier prospered. Just as important, history cannot tell us with certainty where markets or the economy will be headed, nor can it predict your future income and liquidity needs. That is why AMG focuses on helping clients prepare for whatever lies ahead. Ultimately, portfolios should be built around the future you are designing, whether that means growing a business, traveling the world, retiring with confidence, or advancing legacy and philanthropic goals.

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