US Economic Growth Outpaces Global Peers Driven by AI and Stimulus

The current economic landscape is a complex interplay of robust growth drivers and simmering uncertainties, a dynamic David Solomon, Chairman and CEO of Goldman Sachs, navigates with a keen eye on policy, geopolitical shifts, and the transformative power of AI. This conversation reveals that while immediate economic indicators appear strong, particularly in the U.S., the true advantage lies in understanding the downstream effects of current policies and technological advancements. Those who can anticipate the delayed payoffs of strategic investments, especially in AI-driven productivity and M&A, will gain a significant competitive edge. This analysis is essential for business leaders, investors, and policymakers seeking to move beyond surface-level optimism and understand the deeper systemic forces shaping the global economy.

The U.S. Growth Engine: Fuel and Friction

The prevailing narrative for 2025, and projected into 2026, paints a picture of strong economic growth, particularly in the United States. Solomon highlights a confluence of stimulative factors: extensive fiscal stimulus, ongoing monetary easing, a deregulatory environment, and a significant capital investment boom driven by AI infrastructure. This creates a generally constructive environment for risk assets and markets. However, this optimism is tempered by the recognition that geopolitical tensions and policy uncertainty can introduce volatility. The "speed bump" in April, related to trade policy and tariffs, serves as a reminder of how exogenous events can trigger market corrections.

The United States’ structural advantages in innovation, technology infrastructure, and capital markets are seen as key differentiators, widening the growth gap with Europe and China. Europe, despite stated intentions for a more growth-oriented agenda, is characterized by slow implementation and significantly lower trend growth. China, while experiencing a rebound in its equity markets, faces a sluggish economy and complex bilateral relations with the U.S.

"You put those things together and we're coming into a midterm election where the administration's focus is shifting to how average americans are experiencing cost in the economy my guess is you'll get some stimulative actions that are pointed to the midterm elections."

This observation suggests that policy decisions, even those aimed at immediate economic relief, can have longer-term implications for market sentiment and regulatory direction. The focus on "average Americans" experiencing costs could lead to further stimulus measures, potentially exacerbating existing trends or creating new imbalances down the line. The implication is that understanding the political calculus behind economic policy is as crucial as understanding the policy itself.

AI: Productivity's Double-Edged Sword

Artificial intelligence is presented not just as a market driver but as a profound force for productivity, with the potential to reshape industries. Solomon dismisses the "job apocalypse" narrative, framing AI's impact as a continuation of historical technological disruption. The key difference, he suggests, is the pace of change, which can lead to more significant short-term dislocations.

"When you have i i don't think this is different this time technology has been disrupting jobs changing the way people work destroying jobs and forcing us as a vibrant economy to create new jobs for decades and decades and decades and it's no different this time what you might say is happening a little bit differently is the pace of change and so when the pace is very quick that can create more short term disruptions."

The downstream effect of this rapid pace is the potential for job market disruption that outstrips the economy's ability to create new roles quickly enough. While Goldman Sachs sees AI as an opportunity to invest in growth by creating efficiency, this efficiency gain for one organization might represent a reduction in demand for certain roles across the broader economy. The long-term advantage lies not just in adopting AI, but in strategically redeploying human capital freed by AI into new growth areas, a process that requires foresight and investment.

The "One GS 3.0" initiative exemplifies this strategic approach. By reimagining core processes like onboarding and KYC through AI and automation, Goldman Sachs aims to free up human capital for more valuable client-facing activities. This isn't about simply cutting headcount, but about fundamentally altering how work is done to create capacity for growth. The difficulty, as Solomon notes, lies in the "hard work" of changing entrenched processes and human capital utilization within large enterprises. This delayed payoff--increased capacity for growth--is precisely where competitive advantage can be built, as many organizations struggle with the initial implementation challenges.

M&A and IPOs: A Tailwind of Opportunity

The conversation highlights a robust environment for deal-making, with 2026 potentially being one of the best M&A years on record. This optimism stems from a constructive regulatory environment where CEOs feel more confident pursuing strategic transactions. The implication is that companies that have been hesitant due to regulatory uncertainty will now accelerate their M&A strategies, leading to consolidation and strategic realignments.

"I think 2026 will be an even better deal making year 2026 could be one of the best m a years ever i can see through our backlog and our activity levels and our client dialogues a very robust environment for deal making."

This sustained robust deal-making activity, while seemingly a direct benefit to investment banks and acquiring companies, has broader systemic consequences. It can lead to the reallocation of capital, the integration of technologies, and shifts in market power. Companies that proactively identify strategic acquisition targets or prepare themselves for acquisition will benefit from this environment. Similarly, the IPO market is expected to see continued improvement, driven by private equity portfolios maturing and companies that have stayed private longer now considering public offerings. This increased access to public markets provides capital for further investment and innovation, creating a positive feedback loop for growth.

Key Action Items

• Immediate Action (Next Quarter):

  • Map AI's Process Impact: Identify 1-2 core business processes within your organization that could be fundamentally re-imagined using AI, focusing on freeing up human capital for higher-value tasks rather than just automation.
  • Scenario Plan for Geopolitical Shifts: Develop contingency plans for potential disruptions stemming from geopolitical tensions, focusing on supply chain resilience and market access.
  • Assess M&A Readiness: For acquisitive companies, begin identifying potential targets and for others, assess strategic positioning for potential inbound interest.

• Short-Term Investment (Next 6-12 Months):

  • Invest in AI Skill Development: Implement targeted training programs for employees to adapt to AI-driven workflows and foster a culture of continuous learning around new technologies.
  • Strengthen Regulatory Compliance: Proactively engage with evolving regulatory landscapes, particularly concerning data privacy and AI ethics, to ensure smooth M&A and operational execution.
  • Build Strategic Partnerships: Explore collaborations that leverage AI for productivity gains or access new markets, focusing on partners who can accelerate adoption and integration.

• Long-Term Investment (12-18 Months and Beyond):

  • Cultivate a Culture of Adaptability: Foster an organizational culture that embraces change, encourages experimentation with new technologies, and views disruption as an opportunity for growth. This is where immediate discomfort (e.g., learning new systems) creates long-term advantage.
  • Strategic Capital Allocation for AI: Develop a long-term capital allocation strategy that prioritizes investments in AI infrastructure and talent, recognizing that the productivity and competitive advantages will accrue over time.
  • Focus on "Next-Gen" Roles: Begin planning for the evolution of job roles within your organization, identifying where new skills will be needed as AI integrates further, creating a durable competitive moat through human capital development.