Chart of the Month
Kids are on Christmas break, but they’re soon to return to school as we turn the calendar to a new year. What better way to get brains fired back up than by revisiting Economics 101 again (we reviewed in our August 2025 Viewpoint, too).
One of the foundational learnings is understanding the components of a country’s Gross Domestic Product (GDP), which is simply a way to derive the monetary value of all final goods and services produced within a country’s borders. There are four components: consumption, investment, government spending, and net exports. Add these all together and you get GDP.
Our chart this month focuses on the anticipated impact to future GDP readings in the U.S. coming from fiscal policy. Over the past 12 quarters (Q4 2022–Q3 2025), U.S. GDP has averaged quarterly annualized growth of ~2.8% based on quarterly SAAR data. The most recent release from 12/23/25 showed growth at an annualized +4.3%.1
Several components, as the chart illustrates, are expected to keep producing positive GDP benefits in the periods ahead, too. The most prominent coming from tax cuts – such as no taxes on overtime and tips or the increased SALT deductions – which, in turn, should lead to higher refunds as the tax season approaches. As those tax refunds hit bank accounts, they recycle into more consumption and investment, from both consumers and businesses.
The yellow dots on the graph show the totality of the various policy effects, with Q1 and Q2 of 2026 clearly exhibiting the anticipated peak of the impact. This again aligns with the seasonality on taxes as most Americans file their returns in the Q1 and Q2 window.
With the consensus view that quarterly annualized GDP growth will run at about 2% for the period ahead, the yellow dots (at ~0.50%) suggest fiscal policy could contribute roughly one-quarter of expected GDP growth in early 2026. Add this to the “hyperscaler” capital expenditure outlays we discussed in our November 2025 Viewpoint, and you have two prominent stories on what could drive growth through 2026.
While markets are forward-looking, and this data is likely priced in, sustained economic growth remains a favorable backdrop for asset owners compared to the alternative of declining GDP.
2026 Tax Reference Guide
The 2026 Tax Reference Guide delivers an actionable snapshot of the latest federal tax updates for the year ahead. Review this information for updated tax brackets, deductions, contribution limits, Affordable Care Act provisions, business income deductions, capital gains rates, and Medicare adjustments—along with reforms from the One Big Beautiful Bill Act that take effect this tax year.
Highlights include a new temporary deduction for taxpayers age 65 and older, an increased Child Tax Credit, enhancements to Qualified Small Business Stock, and broader qualified expenses for 529 plans, plus business provisions like 100 percent bonus depreciation and immediate domestic R&D expensing.
Use this guide to inform your financial planning. Please contact your advisor or tax professional for customized guidance.
Access the guide here.
