Experian’s recent Macroeconomic Scenarios Forecast Q1 2026 offered a positive outlook for 2026, albeit with a cooling of the GDP and concerns about the labor market.
Joeseph Mayans, Experian chief economist, and Rikard Bandebo, chief strategy officer/chief economist at VantageScore, discussed economic trends during a Feb. 26 webinar. Mayans said every time he does these reports, especially over the last year, there is something new every quarter, but he believes the economy overall is in a good position. Although the economy expanded at 1.4% in Q4 2025, lower` than expected, Mayans thinks that the underlying drivers of the economy are still there.
“Clearly, the economy has been fueled by what is happening with AI and AI investment,” Mayans said. “A huge amount of infrastructure spending, software spending and that by and large investment has boosted equity markets and boosted spending in higher income households.”
F&I is one area that could be affected in a big way by AI, Mayans said. He cited a large survey about the issue of AI and labor, showing most firms have not seen a big impact with AI, though they do expect a bigger change over the next three years. Companies that have seen AI make a big impact on their businesses, have also seen the flip side, – smaller employment bases, he said. He used the term “one-trick pony” to describe the effect of AI on the economy is 2025. The AI effect on 2026 will likely be different.
“Overall all for the year ahead, I see a solid economy and a not-so-solid labor market with definitely areas of risk,” Mayans said.
A large portion of the construction investment over the last few years has gone into the construction of data centers. Construction in manufacturing is down or flat, commercial construction or residential construction are also down or flat, Mayans said. But he said one of the things driving these trends are the higher interest rates we’ve had over the past few years.
Bandebo said his forecast for AI is a lot of disruption. But for now it has helped increase productivity, but not to the point where he’s had to replace a team member. His concern is that since AI is expected to disrupt white collar work and white collar work is what tends to drive GDP – then it’s scary.
“Ath the same time, people’s ability to be entrepreneurial increases hugely,” Bandebo said. “Now you can create software applications that used to take an army of engineers. You still need smart people to do the work, so there just might be a shifting of roles.”
On the issue of tariffs, Mayans said he is not as worried about inflation – though it is still a concern. “My view is that it’s about the uncertainty that it causes,” he said.
People don’t want to invest or hire people because they don’t know what’s going to happen – are tariffs going up, going down? Also, he said lenders are very cautious to lend into that environment.
“One of the key trends I’m watching this year as it plays out” Mayans said, “is the improvement in some of the uncertainty metrics.”
Bandebo questioned whether businesses just bake in the uncertainty as being part of the new normal. He agreed that it’s hard to grow when businesses are reluctant to make investments.
“But they can’t stay on hold forever,” he said. “They need to grow their businesses.” Eventually, businesses just can’t sit and wait for things to settle down, they “have to get on with it. Mayans expects interest rates to come down some more which could spur investment in other sectors outside of AI.
On the issue of inflation, Mayans believes there will be more improvement throughout 2026. Even though inflation picked up a little bit, there wasn’t a huge bump that many economists expected or predicted. Some economists have predicted that 2026 will be the year that the cost of tariffs will be passed onto consumers and they will see price hikes.
But Mayans cited a business inflation index from the Atlanta Fed about what businesses are paying for input costs, it came in at 1.9% in the latest read, which was the lowest increase that we’ve seen over the past five years. That bodes well for the future of inflation, along with the effect of AI on reducing costs, he said.
Bandebo said it’s not so much current inflation or future inflation affecting people as it was the period in 2021-2023 when inflation spiked as high as 9%, which created a burden on households. Even if the rate went to 0%, households are still struggling from the earlier hit, he said.
Mayans pointed out the average household is expected to get an additional $800 in tax returns this year, which is one reason to be more optimistic
Bandebo, however, said there is a great separation going on with one side struggling to make ends meet and another side with more assets – with the two sides going in opposite directions. He elaborated that there is a still a large segment of U.S. households that are “pretty tight right now,” and “the K-shaped economy is everything right now,” which is when different people experience the economy in vastly different ways, some doing really well and others doing poorly.
“It’s the underlying factor in all the things that we see,” Bandebo said.
The problem with this trend is that the farther these two sides separate, categories like “average,” “means” or “median” become unhelpful to understand what’s really going on, Bandebo said. A VantageScore chart showing credit delinquencies for different products reveal that credit delinquencies of 60+ days are at or near their highest since Q4 2010, including auto loans at 1.67%, which is 56% higher than 2020. Bandebo said it’s not just subprime, but also prime auto loans rising in delinquencies.
In terms of interest rates going forward, the Fed has targeted one cut going forward in 2026, while Mayans predicts two cuts. “I would like to see two or three,” Bandebo said.
On the labor front, job creation improved in January but remained soft at the time of the presentation. Mayans attributes part of this due to the drop in immigration and the crackdown on illegals. Many of the job gains in 2025 came in the lower-wage industries, he said.
Bandebo said although healthcare drove much of the job gains in 2025, which did include higher wage jobs like nursing and doctors, the majority were in the clerical roles, social assistance jobs, food services and community housing within this area, which are well below average in terms of wages. “Healthcare isn’t just nurses and doctors,” Bandebo said.
On March 4, after this webinar, ADP reported private sector job growth rose by 63,000- jobs in February. On the macro side, Mayans expects “solid growth” but not “spectacular growth” at 2.1%. The average growth was 2.5% prior to the pandemic. “But overall, I think the backdrop for the economy is pretty solid,” Mayans said.
Bandebo said the momentum is good and drives so much of the economy. “Lenders are lending and they’re lending more this year than they did last year,” Bandebo said.
This discussion took place before the recent conflict with Iran.
