2026 Forecast

The World faces a year of inflection points.

Normally, I try to post these forecasts around New Years, but I’ve been delayed due to holiday travel, health issues, and just how eventful the first week of 2026 has been. An omen of what’s to come.

The Economy

An economic reckoning is coming, and 2026 could be the year it hits. While 2025 closed out with a lot of economic data that didn’t really line up with the lived experiences of ordinary people, be it due to the concentration of economic activity with the very rich, genuine shifts in demography and technology, or due to multiple top-tier economies being run by demagogues who don’t like bad news. There will be no escaping the bad news in 2026.

The Everything Bubble

AI was an inescapable force in 2025, with the industry contributing to around half a trillion dollars in expenditures, and even more planned to be spent next year. These estimates come despite AI companies running deep losses, a contraction in global capital availability, major players failing to produce measurable improvements on their products, and overwhelming evidence that hardly anyone actually uses their products. There is also the issue that data center construction is now outstripping the grid’s ability to power them, even with the surge in new energy infrastructure.

The AI Bubble is real, but its just the visible aspect of a global economy defined by bubbles. Big Tech as a whole is in a very precarious position given its dependence on cheap capital, and extreme overvaluations propping up massive debt burdens. When the bubble pops, and it will, it will not remain contained to AI. All of Big Tech is going down, and only companies with cash reserves that exceed their debt burden like Apple stand a real chance of weathering the storm.

Given the scale of the Mag-7/AI Bubble, a crash won’t be limited to just tech. Investment firms and individual traders, especially the glut of retirees who control most of the wealth in the US, will dump their portfolios to try and stay afloat. This will eventually reach hard assets like real-estate, only to find a market with far too many sellers and not enough buyers. What follows: a crash in the housing market, mass layoffs, defaults on credit card debt and student loans, and a global recession the likes of which nobody living has experienced.

When will this happen? I don’t know. The AI bubble is a known quantity, but investors haven’t reached a panic moment yet. The might not get there in 2026 and we’ll simply have to suffer through a K-shaped economy where the rich get richer and the poor get poorer. Who knows, that might be more sustainable than we think, over half of consumer spending is now driven by 10% of all earners. Personally, I think the one thing you can rely on in economics is that people panic, and bubbles pop. I just I wish I knew what would kick it off.

Labor Crisis

The labor force of the industrialized world has entered a vicious circle that begins with a shortage of labor. The long and short of it is: between the mass retirement of the baby boomers and xenophobic immigration policies, most advanced economies don’t have enough workers. This creates supply chain interruptions, which makes everything more expensive, and drives down productivity. To arrest inflation, governments try to reduce the money supply, which makes it harder for businesses to borrow. Businesses then layoff workers to cut costs and show short-term profits to make themselves more attractive to banks and investors. In effect: a labor shortage creates an unemployment crisis, driving down productivity and consumer spending.

With around 75% of the baby boomers retired, and the 1.6 million immigrants having lost legal status, to say nothing of those immigrants too afraid to go to work, the labor crisis is now baked into the system. The only somewhat sunny note (for economists and nobody else) for 2025 and 2026, is that the inflation crisis has been, temporarily, blunted by the subsequent layoffs and corporate “no-hire” practices.

American Politics

2026 will be more eventful than usual for American politics, and not just because its an election year. The country faces multiple challenges that would be devastating for the electoral chances of any incumbent party. Falling consumer confidence, social unrest, and outward hostility to key demographics are just what they currently face. Trump and his narrow GOP majority are uniquely incapable of handling a crisis as complex as an economic crash on the scale of what we face. Any bailout will be insufficient to save the effected industries and restore consumer confidence. There’s also the very real possibility that this White House will waste precious time haggling with potential recipients of bailouts to garner personal favors. To the millions of Americans facing layoffs, tariff induced price spikes, wiped out portfolios, and homelessness, Trump’s behavior will appear dangerous and destructive.

Beyond the economic risk, Trump’s assault on immigrants has fueled a major reversal in the Republican Party’s gains with the Hispanic community. During the 2025 elections, we saw multiple races where Hispanics shifted to the Democrats by margins of up to 40 points. This is typically the high watermark for Democrats in most elections, but as the administration continues to assault immigrant communities with ICE raids, and the economic situation applies universal pressure on every demographic, expect those margins to shift even more in the Democrats’ favor.

Speaking of ICE raids, the murder of Renee Good by ICE agents in Minneapolis, and successive murders in other cities has already provoked sharp blowback to which the administration has utterly failed to mount an effective response. Worse than that, the White House is so disconnected from reality that they believed that disparaging the victims of ICE, white women in particular, and releasing the video of the murder taken by the agent in Minneapolis is a winning strategy. Making matters worse, there are multiple videos of ICE agents threatening people with reference to Good’s murder. To add insult to injury, DHS is adding $50,000 signing bonuses to recruit more agents, and training times are being slashed to just 47 days. Violence from border and immigration agents will get worse throughout the year, and at this point another cycle of protests, and civil unrest is baked in. In other words a Long Hot Summer.

All of these trends will intensify with an economic crisis, and Trump’s response will grow more erratic. Expect more efforts from both the White House and state-level Republicans to try and disenfranchise voters, especially with any kind of civil unrest. The problem for the Republicans is that any effort to curtail democracy during this period of resentment will only serve to breed contempt from the populace, and the blowback would get more severe.

By summer, the primary season will be in full swing and the country will have gone through 6 months of, at minimum, more ICE raids, a K-shaped economy, and a President who spends every day injecting chaos and uncertainty into people’s lives. Incumbents from both parties are already facing the risk of stiff competition for renomination, which has already contributed to a surge in retirements. If there is a crash prior to the primaries, this will only intensify.

So let’s skip to the end: The Democrats are going to win both houses of Congress in the midterms, the only question is by what margins. The party enjoyed around a 15 point reversal in 2025’s elections, and even if we somehow avoid an outright market crash, we’ll likely see an even greater partisan swing by election day. But, the question remains: when the economic crisis hit? A few weeks of panic vs. months of brewing anger and desperation will determine the course of history.

At time of writing, Trump has spent the most of his time in office at or near what has been the bottom of his approval ratings. However, on a state-by-state breakdown, the situation is far more dire for the President. If the election were held today, Democrats would likely hold every Senate seat they currently have, and would have very good odds of winning Florida, Texas, Alaska, both Carolinas, Ohio, Maine, Iowa, and Mississippi. They’d also be able to make real fights of the races in Kansas, Nebraska, and Louisiana. I know that sounds utterly fanciful right now, but Trump’s policies have been so reviled by ordinary people, that they’ve not only wiped out the gains made with new voting demographics in 2024, they’ve completely reversed them. Late last year, polling revealed that Republicans were losing white men, something the party hasn’t done since 1964. Make no mistake, in 2026 the worst case scenario for the Democrats is a blowout comparable to 2006 or 2018. But if the country faces a serious economic challenge, the Republican party will be experience an electoral loss that more than likely would lead to Trump and Vance being impeached and removed from office in 2027.

International Politics

The new age of poachers is well and truly upon us, and as is the case with most things in the 2020s, its stupid and needlessly dangerous.

Americas

On January 3rd the US executed a strike on Venezuela, resulting in the capture of President Nicola Maduro and his wife. In the days following this operation, the Trump White House has claimed that the US is seizing control of Venezuela, its oil industry, that it has installed the sitting VP as “interim president,” and at one point suggested that Trump was the acting President of the country. Absolutely none of this has been backed up by action from either party. Venezuela’s actual acting-President has flatly denied any deal with the US, as has its oil industry, no additional troops have been moved into Venezuela, and the US oil industry has no desire for Venezuelan heavy-sour crude, with the CEO of ExxonMobile going so far to call the country ”uninvestable.”

The US is not taking over Venezuela or its oil, but there will be no happy ending for Venezuela either. The country’s low-quality oil saw demand crater after 2015’s Oil Glut, largely due to the surge in light-sweet crude from the US shale boom. Of the ~22 million barrels of oil per day the US consumes, only about 100,000-150,000 bpd is from Venezuela. Rather than developing the country’s oil industry, the US has begun a blockade of its ports and seizing tankers in the Caribbean, which accounts for around 90% of the country’s GDP. Deposing Maduro appears to have been done purely because the White House liked the idea, but the broader effort has only served to further destabilize a petrostate that was barely keeping itself together as it was. This has already given rise to a new wave of violence and price spikes as food imports are interrupted, which will in turn lead to a new wave of the ongoing Venezuelan refugee crisis.

The Trump administration has also suggested that similar acts of military adventurism are forthcoming, with Cuba, Nicaragua, Canada, and Greenland having been listed among the candidates, and renewed calls for air strikes against Mexico’s cartels. In the present climate, its very difficult to say with confidence how this will play out, but there are constraints on the Trump administration that offer some clues to what we can expect. Firstly, direct attacks on Canada and Greenland are unlikely. Greenland is a Danish territory, and thus protected as a member of NATO. The North Atlantic Treaty was ratified by Congress, and in 2024 Congress passed an amendment to the National Defense Authorization Act barring the President from withdrawing the US from the alliance unilaterally. Ergo, any order Trump gives to invade Greenland would be so illegal, its already facing resistance from the Joint Chiefs of Staff. As has often been the case with Trump, those he threatens will likely present him with a deal that is actually just a reiteration of ongoing policy. In this case, expect Denmark to promise the US access to military bases and air and missile warning systems, something the US already has.

The same constraints on US operations against Greenland apply to Canada, but that doesn’t mean Canada is completely out of the woods. Canada’s economy has suffered from the trade war with the United States, with unemployment surging past 6.8% in December 2025. The Carney government has enjoyed a fair amount of public good will in the face of American hostility, but he simply is not doing enough to address domestic economic concerns. WHEN the crash comes, Canada will be in very dire straights, and the separatists in Quebec and Alberta will be emboldened. Alberta in particular will likely use separatism as they always have: a threat against Ottawa to curb any left-wing policy proposals they otherwise could not defeat in the parliament. USMCA reaches its 6 year review period on July 1, 2026, and even if the economy hasn’t crashed by then, its unlikely Carney will break off ties with the US, unless the US is actively intervening in the Alberta separatist movement for its own benefit. In either case, the strength of Ottawa is put into question. If Carney stands against the US and doesn’t extend USMCA, Canada loses another piece of their largest trading relationship, and he’ll be blamed for any economic pain, even if it wasn’t necessarily his fault. If he folds and stays in USMCA he’ll likely face calls to step down, and when the economy tanks any economic pain will be seen as having made the capitulation to the US pointless. Either way, Carney faces serious risks to his government.

The country that faces the greatest risk of a Venezuela-style attack is Cuba. Cuba already hosts a US military base, Guantanamo Bay, and is only 90 miles away from the US mainland. The island has long been seen by the US as strategically vital, and by the Republican party as an unaddressed threat. Its air and naval defenses are not substantively better than Venezuela’s, and the country is similarly facing domestic instability, largely from constrained oil supplies that will only get worse now that the US is taking on the shadow fleet (more on that later). From the White House’s perspective, it would be fairly trivial for JSOC to execute an anti-regime kidnapping in Cuba. Even so, such a mission would take time to train, and likely wouldn’t be carried out until later in the year. There is the possibility for a large-scale conventional invasion, but I don’t see Trump having the attention span for such a campaign.

Middle East and North Africa

The Middle East was already facing multiple destabilizing crises at the end of 2025 that will continue to play out in 2026. The most well known is the ongoing civil war in Yemen, which at the end of 2025 saw a new faction consolidate control of much of the country from the UN recognized government. Unlike the largely ineffective Yemini government, the Southern Transitional Council or “South Arabia” regime is an anti-Islamist regime that has sought to paint itself as a stabilizing force in the region, aided in no small part by its opposition to the Houthis. Yemen’s international recognized government is backed by the Saudis whose international pull remains quite strong. The STC is backed by the UAE, whose international position continues to grow, and who are more palatable for domestic political consumption. These factions will trade territory throughout the year as the Yemeni civil war has now shifted from an Arab-Iranian proxy conflict into a Saudi-UAE proxy conflict.

The Houthis greatest risk is that they now lack the same supply of support from Iran, following that country’s defeat in a devastating air war from Israel. This year things are already getting worse for Iran. The country’s water crisis has no end in sight, protests and civil unrest grip the country, and there are reports of more acts of terrorism from Kurdish and Baloch separatists. At time of writing, demonstrations have spread across almost every province. By the regime’s own admission, they’ve seen more deaths in the security services from these protests than any prior era of demonstration since the Revolution.

While there is the question of if the Islamic Republic will survive, or if something new will take its place, this is less significant than the fact that Iran is entering a period of prolonged instability. This will not stay inside Iran, and we should be prepared for sectarian violence to spill over into neighboring states, particularly Pakistan and Afghanistan who are experiencing similar systemic issues of instability.

Former Soviet Union

In the first week of 2026, the Trump administration made a significant shift in its posture toward the Russian Federation when the US seized a tanker of the Russian Shadow Fleet. The Shadow Fleet consists of hundreds of ships under false flags and designations to allow Russia to continue to export petroleum to the wider world to avoid sanctions, amounting to up to $100 Billion a year in revenue. For the bulk of the Ukraine War, there has been no concerted effort to stop these vessels, but with the US seizure that will change in 2026, drastically curtailing one of Russia’s only remaining exports. Additionally, the US is not limiting the interdiction of tankers to the Russian Shadow Fleet. Venezuelan and Iranian ships are also being targeted, which with the Russian fleet accounts for around 5-7 million bpd of oil.

The Russian economy has been in decline for decades, growing in severity with the Ukraine War and the sanctions applied by the international community. The war economy and the oil trade was effectively the only thing propping up Russia’s economy. The war economy began to fall apart last year as Ukrainian drone attacks and long-range missiles began interdicting Russian supply chains. These same tactics have done a great deal of damage to the Russian oil industry as well, and the erosion of the Shadow Fleet represents a significant risk to Russia. A global economic crash would bring the country to its knees.

While Russia loses the war at home, in Ukraine they continue to face a largely static front. Peace negotiations have once again hit a wall, as the conflict remains irreconcilable: Russia cannot accept anything less than a defenseless and subservient Ukraine, and Ukraine will never allow itself to be left open to attack. So the conflict will continue until the Russians or Ukrainians reach a breaking point. Discontent among the Russian populace has thus far been kept in check by a concerted effort by the Putin regime to insulate ethnic Russians from the pains of the war. That effort is failing, and in 2026 we should expect more pressure on Putin from his own people.

Militarily, both sides of this war are facing manpower shortages, but Russia has apparently exhausted its mechanized forces. The country is now relying on horse-mounted cavalry units in some cases. Meanwhile, Ukraine is now hitting targets as far east as the Caspian Sea using missiles, drones, and special forces units. We can now assume the Russo-Ukrainian border has become so porous that attacks like this will become more frequent, further degrading Russian supply lines, but also the Putin regime’s legitimacy.

Europe

While most see the main challenges plaguing Europe coming from hostile actors like Trump or Putin, in 2026 the real threat is within each nation. Multiple governments are politically paralyzed, and local far-right movements will only benefit from the coming economic crash. We should be prepared for changes in government across the continent as Europe experiences an anti-liberal wave much as the US did in 2024.

This potential political backslide will not be completed in 2026, but a nationalist wave is a significant threat to NATO, far more so than Trump’s efforts to annex Greenland or even threats to Canadian sovereignty. Given the risk of a Russian implosion, or even just a perception of Russian weakness, the cohesion of the alliance is likely to be tested. European states under pressure from nationalist parties or under nationalist governments will begin to pull back efforts to strengthen the alliance or expand its membership. A “European Army” will be a dead letter. The EU will similarly face threats to its cohesion, and we should be prepared for new calls by far-right groups for EXIT referenda.

China

China’s greatest challenge in 2026 is a global economic crisis beginning in the US. Much of this risk is well trodden ground, China’s dependence on cheap capital, its overleveraged banking sector, its colossal real estate bubble, its demographic crunch, but one area that doesn’t get a lot of attention is its deflationary policies. Last year China hit a 3 year high for consumer inflation, mainly driven by food prices, in spite of government efforts to reduce the money supply. When the economy shifts into a recession, China’s own policies will trigger a deflationary spiral that will have domino effects across the economy. I don’t know if 2026 is the year where everything falls apart for China, but this is the year when its going to start.

Space

2026 is shaping up to be the most consequential year in spaceflight since 1968. A quick rundown of what’s on the docket:

Artemis II is set to liftoff NET February 2026, attempting to send humans around the moon for the first time since 1972. Rocketlab is set to test its Neutron medium lift, partially reusable launch vehicle. Relativity will attempt a launch of its heavy-lift launch vehicle Terran-R. China has multiple reusable first stage rocket tests scheduled. The Japanese space agency JAXA will attempt a sample return mission to Phobos. The Nancy Grace Roman Space Telescope is already preparing for launch. Intuitive Machines, Astrobotic, Firefly, and Blue Origin will all attempt uncrewed lunar landings this year. And SpaceX is planning additional tests for its Starship launch system, including an orbital fuel transfer and a “catch” of the Starship spacecraft. I’m not going to speculate on launch dates or test scheudles, but as a rule: launch dates slip. And given the risk of another government shutdown in the US after January 30, that risk is higher than usual.

This year’s most significant milestones in spaceflight, beyond Artemis II, are the testing of new launch vehicles, which promises to diversify a market dangerously monopolized under SpaceX. That said SpaceX is also proceeding with a major expansion of its Starship production facility, the so-called “Starfactory,” and multiple launch towers at Texas and Florida. The Starfactory aims to give SpaceX permanent mass-production facilities for Starship. From images of the still under construction “Gigabay,” vehicle assembly building, we know that this will include 24 workbays for final assembly of Superheavy Boosters and Starship spacecraft. The Gigabay is unlikely to be ready for production in 2026, but it signals SpaceX’s confidence in its current design for the Starship launch system.

The biggest risks to the space industry in 2026 are a potential loss of crew during Artemis II, and of course a crash in the economy. The space industry is home to the most capital intensive projects in the world, a contraction of capital would seriously hinder everybody’s plans. Most companies won’t survive, and most projects, no matter how technically significant, will either die on the vine or at best be taken over by companies with deep cash reserves. SpaceX might be able to exploit its grip on space access and its ties to the Trump administration to secure a bailout, but as in all things in 2026: You cannot predict the behavior of an irrational actor.

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A final note: there is no denying Trump’s deteriorating health, and should he be rendered incapacitated or dies in office, this forecast will start to break down. If the President’s condition is confirmed by either Vice President JD Vance or Secretary of State Marco Rubio, and the cabinet sides with one or both of them, the forecast will play out more or less as I’ve laid it out. But if Stephen Miller has control of the President, we run a very real risk of total chaos as Miller will inevitably try to fool the country into thinking the President is still in full control of his faculties while he continues to try and run the country from the shadows. That would kick off a cycle of palace intrigue, political and legal chaos, and geopolitical risks that would spiral out of control… and I don’t have the energy to try and forecast that at this time.