Morgan Stanley said the latest US economic data shows the economy remains resilient, with consumer spending continuing to support growth, the labor market remaining stable and inflationary pressures showing signs of continued moderation.
Following the developments, investment bank Morgan Stanley revised its 2026 forecast towards stronger economic growth and lower unemployment, while maintaining expectations that the Federal Reserve still has the opportunity to cut interest rates in the second half of the year.
November's better-than-expected retail sales data reinforced the view that US consumers are still spending, with spending at gas stations and recreational goods helping to offset weakness in categories such as furniture and department stores.
While the cost of living remains a challenge, especially for low- and middle-income households, consumer spending continues to be a key driver of the economy, contributing a large portion of the 4.3% growth in the third quarter of last year.
In the labor market, a decline in initial jobless claims and low levels of job separations suggest that companies are still cautious about reducing their workforces, thus reducing the risk of a sharp slowdown in the labor market.
Meanwhile, December inflation showed a modest but consistent core moderation. This indirectly supports the view that the disinflation process is still underway, albeit unevenly. A background factor that, according to Morgan Stanley, opens the way for a gradual easing of monetary policy in 2026.
