Abacoa & Alton Neighbors - May 2026

14 A B A C O A & A LT O N N E I G H B O R S | M AY 2 0 2 6 - By Jeremy L. Wilmes MBA, CFP,®ChFC®CLU,®CASL, RICP® - Economic Update FOR MAY A s of early spring 2026, the U.S. economy continues to expand, though growth has moderated meaningfully from the stronger pace seen earlier in the post-pandemic cycle. After solid activity through much of 2025, economic momentum cooled in the second half of the year. Most consensus forecasts now project real GDP growth in the roughly 2% range for 2026, reflecting continued expansion but at a more measured pace. As of May 2026, the U.S. economy continues to expand, though at a more moderate pace than earlier in the post-pandemic cycle. Following solid activity through much of 2025, momentum softened in the latter half of the year and into early 2026. Current consensus forecasts generally point to real GDP growth, around 2% this year, consistent with continued expansion, but reflecting a more measured and uneven trajectory. Monetary policy remains a key influence on the outlook. After initiating rate cuts in late 2025, the Federal Reserve has adopted a more balanced, data-dependent stance. Policymakers are navigating the tension between gradual disinflation and emerging signs of labor market softening. While inflation has declined significantly from prior peaks, it remains above the Fed's 2% long-run target, with recent readings still in the 2.5%-3% range. This has reinforced a cautious approach toward any additional easing. Labor market conditions have also continued to normalize. Job growth has slowed from earlier robust levels, and the unemployment rate has edged into the low- to mid-4% range. While this reflects a cooling from historically tight conditions rather than a sharp deterioration, recent indicators suggest hiring momentum has weakened, underscoring the risk of further softening if economic growth continues to decelerate. At the same time, geopolitical developments, particularly in the Middle East, along with higher energy prices, have added a layer of uncertainty to the outlook. Elevated oil prices could place renewed upward pressure on inflation while weighing on consumer spending, complicating the policy path, and increasing the risk of a more challenging mix of slower growth and persistent price pressures. Looking ahead, private-sector investment remains a potential source of resilience. Continued spending in technology, artificial intelligence, and productivity-enhancing infrastructure could help offset cyclical headwinds. Strong corporate balance sheets and ongoing innovation may support economic activity even as policy remains restrictive and global risks persist. Bottom line: The U.S. economy is still growing, but the pace has moderated, and uncertainty has increased. In this environment, maintaining exposure to high-quality assets characterized by strong balance sheets, ample liquidity, durable cash flows, and pricing power remains a prudent approach for navigating slower growth, evolving policy dynamics, and elevated geopolitical risk. Securities and investment advisory services offered through Osaic Wealth, Inc. Member FINRA/SIPC. Osaic Wealth is separately owned, and other entities and/or marketing names, products, or services referenced here are independent of Osaic Wealth. EXPERT CONTRIBUTOR U.S. Economic Outlook: Slower Growth, Elevated Uncertainty