On the Record On the 2026 Q1 World Economic Update
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Jan 27, 2026 
Natasha Sarin, Yale law professor focused on fiscal sustainability; Jan Hatzius, Goldman Sachs chief economist with data-driven macro forecasts; Karen Karniol-Tambour, Bridgewater co-CIO on macro and AI market effects. They discuss geopolitical volatility and market complacency. They cover rising U.S. public debt and Europe’s fiscal strain. They debate AI’s macro impact, China’s mixed outlook, and private credit risks.
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Fiscal Needs Rise As Productivity Weakens
- Karen Karniol-Tambour links higher fiscal needs to modern mercantilism and supply‑chain security spending.
- She argues poorer productivity plus new defense and AI demands push many rich countries into fiscal stress.
Sustain Targeted German Fiscal Investment
- Jan Hatzius expects Germany's fiscal expansion to lift growth modestly to ~1–1.5% short term.
- He advises sustaining targeted infrastructure and defense spending to avoid long-term stagnation.
Tariff Effects Fade, Disinflation Returns
- Jan Hatzius forecasts disinflation through 2026 as tariff effects fade and labor slack widens.
- He expects modest Fed easing (≈50bp) unless inflation re-accelerates.