Wilmington Trust Sees 'Economic Experiment' Clouding 2026 Outlook

WILMINGTON, Del. – January 06, 2026 – A period of large-scale “economic experimentation” is reshaping the investment landscape, creating a climate of heightened risk and unique opportunity, according to Wilmington Trust. The wealth management firm today released its 2026 Capital Markets Forecast, which paints a cautious picture of the year ahead, projecting U.S. economic growth to fall below 1%.

The report, titled “Investing in a Period of Economic Experimentation,” argues that paradigm shifts in trade policy, labor force dynamics, and U.S. fiscal strategy are pushing the economy into uncharted territory. It advises investors to discard old playbooks and embrace adaptability, diversification, and rigorous analysis to navigate a future where traditional cyclical patterns are becoming less reliable.

“With multiple large-scale economic experiments underway, the range of potential outcomes for the U.S. economy has widened,” said Tony Roth, Wilmington Trust's Chief Investment Officer, in the report's release. “Structural changes across trade, labor, technology and fiscal outlooks are reshaping how markets function and how risks are priced.”

A Divergence in Economic Forecasts

Wilmington Trust's forecast for U.S. economic growth to dip below 1% in 2026 positions the firm as a notable outlier among its peers. The prediction stands in stark contrast to more bullish outlooks from other major financial institutions. For instance, Goldman Sachs has projected a robust 2.6% real GDP growth for 2026, citing potential tariff relief and productivity gains from artificial intelligence. Similarly, the Congressional Budget Office (CBO) recently revised its own forecast upward to 2.2% growth for the year.

The firm attributes its more conservative stance to the combined headwinds of high tariffs weighing on manufacturing, a tightening labor supply, and the growing constraints of the nation’s fiscal situation. While acknowledging that successful experimentation in technology could yield long-term benefits, the immediate outlook is one of slower growth and increased volatility. This cautious optimism underscores a central theme of the report: preparing for a wider range of scenarios is now more critical than ever.

The Three Pillars of Uncertainty

The forecast centers on three core economic experiments that are fundamentally altering market dynamics.

First is the dramatic shift in Tariffs and Reshoring. The U.S. has embarked on its most aggressive trade protectionism in over a century, with the average effective tariff rate soaring from 2.5% to a settled rate of 16.8% by late 2025. This includes sweeping 25% tariffs on steel, aluminum, and imported cars, alongside the elimination of the “de minimis” rule that once allowed duty-free imports under $800. While these policies are intended to onshore supply chains and bolster domestic manufacturing, Wilmington Trust warns that the risks of business uncertainty and economic drag could outweigh the rewards. The experiment forces companies to re-evaluate global dependencies, creating potential investment opportunities in automation, smart manufacturing, and capital-intensive industries that can navigate the new trade reality.

Second is the challenge of a Shrinking Labor Force. The U.S. is grappling with powerful demographic crosscurrents. The labor force participation rate has hovered around 62.5%, reflecting a long-term decline driven by an aging population. Workers aged 65 and older are the fastest-growing segment of the workforce, while overall population growth is slowing. Compounding this, the report notes, are tighter immigration policies. This constrained labor supply is occurring just as artificial intelligence begins to reshape demand. While AI threatens jobs with easily automated tasks, such as customer service and data entry, it is also projected to fuel demand for software developers, AI specialists, and data architects. This dual force carries significant implications for long-term growth, wage dynamics, and consumer demand.

Finally, the report scrutinizes the ever-present issue of U.S. Debt. With federal debt held by the public projected by the CBO to reach an alarming 122% of GDP by 2034 and 156% by 2055, the nation’s fiscal path is deemed unsustainable. Soaring interest costs, which are on track to exceed the entire defense budget, are a primary driver of this trajectory. Wilmington Trust warns that this unstable debt path will inevitably impact interest rates, housing affordability, and the strength of the U.S. dollar. This fiscal pressure supports a case for portfolio diversification into assets like precious metals and selective cryptocurrencies, which may act as a hedge against currency risk and persistent deficits.

Forging a Path: Investment Strategies for a New Era

In this environment of elevated valuations and heightened uncertainty, Wilmington Trust advocates for a disciplined and diversified approach to portfolio construction rather than attempting to predict specific outcomes. “Periods of economic experimentation demand a thoughtful balance between opportunity and risk,” Roth stated.

The firm highlights several key areas for investment focus, moving beyond broad market exposure to target specific themes driven by these secular shifts.

In Smart Manufacturing, opportunities are emerging as companies invest heavily in AI-driven productivity, automation, and cybersecurity to secure newly reshored or reconfigured supply chains. The report suggests that industrial capital goods providers are well-positioned to benefit and that selective exposure, including through private markets, could enhance returns.

For Artificial Intelligence, the strategy is nuanced. While some semiconductor and data center stocks appear overextended, near-term opportunities remain attractive in the underlying infrastructure—cloud providers, hyper-scalers, and the energy and cooling solutions needed to power the AI boom. Longer-term, the focus will shift to companies that successfully adopt AI to drive significant business efficiencies.

Regarding the Debt Cycle, the report suggests U.S. debt should remain attractive on a relative basis, but with a clear preference for high-quality, investment-grade credit. With historically tight credit spreads leaving little room for error in lower-quality debt, caution is paramount. At the same time, the persistent fiscal deficits and potential currency risks argue for an accelerated diversification away from the U.S. dollar, making precious metals and carefully selected digital assets potential strategic diversifiers in a well-balanced portfolio.