3 headwinds and tailwinds facing US economy: Goldman Sachs vice chair

ARLINGTON, Texas — To hear President Donald Trump tell it, the American economy is “roaring like never before.” The International Monetary Fund, meanwhile, recently described it as “buoyant,” with a few notable caveats.

USA Today, in an analysis piece this week, called it “fine, if not impressive” but ultimately not “working well for many people.”

Evidently, opinions on the state of the American economy vary widely, with plenty of unknowns across geopolitical conflicts, technological advances and demographic shifts. To put some of that uncertainty in context, Robert Steven Kaplan, the former Dallas Federal Reserve president and CEO, provided a measured view of the nation’s economic outlook before a crowd of finance leaders at the annual Radiance conference, held this year in Arlington, Texas.

Kaplan, who now serves as vice chairman of Goldman Sachs, kicked off his keynote address by pointing out the perils of an aging society in the U.S. and around the “developed world.”

“Due to aging, workforce growth is decelerating,” he told attendees at the conference, held by Houston-based fintech firm HighRadius. “In the United States, workforce growth is basically down to close to zero. When I was growing up, it might have been two or three percent a year.”

Kaplan went on to outline his view of the three biggest headwinds and tailwinds to economic growth.

Three headwinds to watch…

1. Despite U.S. Supreme Court ruling, the tariff issue isn’t going away.

After the high court’s ruling against many of Trump’s tariffs on Feb. 20, the administration, “in a nanosecond,” doubled down and began looking for other authorities to keep the levies in place, Kaplan noted. The administration concluded that the nation needed roughly $325 billion to $350 billion in tariff revenue to help offset a growing debt load, he said.

While Kaplan cited the nation’s high debt as a significant concern, he said that tariffs bring their own set of concerns.

“The problem with tariff revenue,” Kaplan said, “is by and large, it acts like a tax on consumers, a tax on companies.”

The approach “slows growth” and “puts sand in the gears of costs,” he added.

And though some observers may have expected the court’s ruling to deter the administration, Kaplan emphasized that “they’re not gonna back off it.”

2. The nation continues to grapple with a labor “mismatch.”

Kaplan said he had “never seen a period in my business career where college graduates might be struggling to find jobs but there are a record number of open jobs.”

Why’s that? Kaplan described it, in part, as a side effect of a major immigration crackdown in the U.S. that is now keeping a portion of the roughly 12 million to 15 million undocumented immigrants on the sidelines. This group had made up a sizable portion of several blue-collar workforces, including agriculture and construction.

“As advertised, the Trump administration … is shutting off that lax immigration” of the prior administration, Kaplan said.

But as waves of newly minted bachelor’s degree holders begin seeking jobs, they’re eschewing open jobs long held by immigrants. “Window installers, electricians, plumbers, technicians — you name it. These are lucrative jobs,” Kaplan said.

3. Government shutdown side effects linger.

The nation’s longest shutdown in history in October likely had an effect on the nation’s economy, Kaplan said. “If you stop paying government workers for two months,” Kaplan said, “that will slow economy.”

And, it bears noting that the U.S. federal government remains in a partial shutdown even today. The effects of a smaller shutdown aren’t immediately clear, but the dysfunction is sure to be a continued headwind for companies, especially those that do business with the government.

… and three tailwinds to expect

1. Changes in tax law could prove beneficial for consumers and businesses.

Kaplan pointed to the One Big Beautiful Bill Act’s removal of taxes on tips and overtime among the reasons he’s optimistic about GDP growth in 2026. The law’s accelerated depreciation could be helpful, too.

“That entire package of tax incentives is going to add at least three-quarters of 1% to GDP growth in ’26,” Kaplan said. “Big stimulus.”

2. Relaxed regulation could boost business.

Since Trump’s return to the White House, he has pledged to cut regulations as much as possible. One of his first orders of business was to issue an executive order that calls for agencies to repeal 10 regulations for any new ones proposed.

Kaplan made the case that such moves, ultimately, will be good for business, stating that they’ll “make it easier to get productivity improvements.” Businesses should expect to “start to see the benefits of that” in 2026.