Goldman Sachs projects robust consumer spending will fuel a sustained equity market rally across major sectors in 2026, with S&P 500 potentially reaching 5,800 by year-end. The outlook hinges on resilient wages, durable inflation control, and elevated household balance sheets.
- S&P 500 projected to reach 5,800 by end of 2026
- Real disposable income growth forecast at 2.4% annually
- Core PCE inflation expected to stabilize at 2.7% by Q3 2026
- Consumer discretionary sector projected to rise 22%
- Personal savings rate to remain above 3.5%
- Corporate earnings growth in consumer sectors forecast at 8%
A sustained surge in US consumer spending is poised to drive a broader equity market rally in 2026, according to Goldman Sachs’ latest macro outlook. The firm anticipates that real disposable income growth will average 2.4% annually through the year, supported by steady job gains and moderate wage pressures. This foundation is expected to boost retail sales by 3.8% year-over-year in the second half of 2026, directly impacting consumer-facing equities. The equity rally forecast hinges on the consumer’s ability to maintain purchasing power despite elevated interest rates. Goldman projects core PCE inflation to stabilize at 2.7% by Q3 2026, allowing the Federal Reserve to begin rate cuts in late Q4. This shift is expected to lift equity valuations, particularly in growth and discretionary sectors. The S&P 500 is projected to reach 5,800 by December 2026, a 14% increase from current levels, driven largely by gains in the consumer discretionary (up 22%) and information technology (up 18%) sectors. Key indicators underpinning the forecast include a personal savings rate holding above 3.5%, a labor market unemployment rate of 4.2%, and a consumer confidence index surpassing 105. These metrics signal sustained demand resilience. Additionally, the firm highlights that corporate earnings growth in consumer-related industries could exceed 8% in 2026, further reinforcing market momentum. The rally is expected to extend beyond domestic equities, with emerging markets and global consumer staples seeing secondary gains. Investors in ETFs like SPY, QQQ, and VOO are likely to benefit from broad-based exposure, while sectors reliant on domestic demand—such as autos, retail, and leisure—could see double-digit returns. The shift in market leadership from rate-sensitive mega-caps to cyclical and earnings-driven names is a central theme in Goldman’s 2026 scenario.