Investors are bracing for a tough 2026. This comes as confidence in the stock market has dipped as questions about the sustainability of the market’s recent rally.

Yet despite this cautionary stance, economists are as bullish as they’ve been in the past year, primarily due to the productivity enhancements brought by AI.

While there’s a lot of discussion about whether or not corporate AI investments do anything, the data speaks for itself.

The U.S., which has invested more aggressively in AI than any other region, has been separating from peers on this front. And economists predict this will further economic growth.

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Investors are bracing for 2026 to be tougher across the board than 2025.

This comes as Americans have grown less confident the stock market will continue its rally this year, and more confident unemployment will climb.

That kind of skepticism can spread fast because people tend to feel negative emotions like fear of loss more than they do the joy of a gain.

Markets tend to work best when optimism stays contained and sentiment leans more neutral. When the crowd is already thrilled, good news has nowhere to go. When the crowd is wary, good news can keep surprising to the upside, week after week.

And even though the public is adopting a cautionary stance, economists are as bullish as they’ve been in the past year.

While there’s a lot of discussion about whether or not corporate AI investments do anything, the data speaks for itself.

The U.S., which has invested more aggressively in AI than any other region, has been separating from peers on this front. OECD data shows U.S. labor productivity rose 10% between 2019 and 2024, while the UK and Eurozone were largely flat over the same stretch.

That doesn’t happen by accident. Economists in a Financial Times survey suggest that the U.S. wins on four fronts: it has deeper financing, a more flexible labor force, a lead in technology development, and relatively low energy costs to power AI development.

Nina Skero at the Centre for Economics and Business Research called AI and related digital tech the new productivity frontier, and said U.S. leadership in investment and development should extend the productivity lead.

And when you ask economists directly where this goes, you get a lopsided answer. In that same FT poll, 31% of respondents said the U.S. would retain its productivity advantage, and another 48% said the advantage would extend.

That’s more than three-quarters expecting the lead to hold or widen.

And this is expected to translate into greater economic growth, too.

Economists gave their 2026 GDP growth predictions for the U.S., the Eurozone, U.K., and Japan during each quarter of 2025. The U.S is not only the region with the highest expected GDP at over 2%, but it’s the only region with higher expectations in the fourth quarter than the first quarter.

Take a look…