Bob Fraser’s 2026 Economic Outlook: Investable Megatrends & Market Signals

I'm going to show you what has happened since the ChatGPT launch in November of 2023. The change in jobs according to people that actually print paychecks, having lived through the dot-com era, how impactful that era was. And I believe AI is the next version of that. The wealth effect. This is the net worth of households and nonprofits, and the blue line is the net worth. And you can see it keeps going up.

Are we heading into a recession or a generational investment window? Welcome back, future billionaires. Today we have a very special presentation that tackles this exact question. Bob Fraser, Aspen's co-founder and chief economist, shares our 2026 macro outlook, unpacking the megatrends that will shape capital flows and opportunities for the years ahead. This is the same research that our team uses to allocate capital, and today it's yours. Enjoy.

So I do this Every year, this is a discipline for me. And it's really something that I love to share with people, but I would do this if no one listened or watched. So this is our playbook. I'm gonna be sharing with you the trends we are paying attention to at Aspen and how we are making our decisions. So absolutely loved our previous speakers. These are my top, top voices that I listen to. And I'm going to share kind of our playbook at Aspen and my thoughts for 2026. And it does differ a little bit, and a few, few maybe surprising things. Our process is to pay attention to these trends. I want to get more, I want to get data on where's the world moving, what tides are rising. And then I want to identify the best strategies to capture those trends. And then I want to put together the best deals and investments. And so that's, that's what we do at Aspen. We've been doing that for almost 15 years now, returned over $100 million in capital to our investors over those years. And we do our best to, you know, we're not batting 1,000, but we do our best to, to, to place capital for our investors where it's going to win the most. And we are our own largest investors. So we eat our own dog food. All right, I'm going to jump in here and we'll start with a few fun things. So, Fraser's Fun Facts and Proof That the World Is More Insane Than You Think. So, here's a chart from the Bureau of Labor Statistics. So, federal employees are down 9.2%. Who can believe that? So, that's either a good thing or a bad thing, you know, according to, you know, My view, that's, that, that's, you know, you know, the government does not create, uh, GDP and generally get in the way of it. So, so I'm, uh, I, I, that's not— doesn't scare me. All right, here is fun fact number 2. Europe's new growth strategy for, for their revenues in 2024 and 2025. Europe has levied more in fines against U.S. tech companies than are collected in taxes from European tech companies. So there you have it. So Europe's new strategy is to to find American tech companies. Wonderful. We touched on this a little bit, Mamdani's New York nightmare. These charts, this data is from JP Morgan, just came out. They're trying to solve a rental crisis in New York. And they actually have between 25,000 and 50,000 zombie apartments that are intentionally left vacant because rent control makes it non-economic to renovate. So, it's kind of insane. You can see the chart over here and it shows the rent increases that they are allowed to make in rent-stabilized apartments. And you can see the operating costs. So, the operating costs continue to rise, but the rents are not allowed to keep pace. And so, people simply say, "I can't afford to renovate this property or to rent this property." because it doesn't pencil. And in 2024, New York permitted the fewest new housing units in the 21st century. So they're not building anything because of the bureaucracies. And REBNY reports that 31% of New York housing that is in pre-development stage today has been in pre-development for 5+ years. Stalled due to permitting issues. So you got a massive bureaucracy, and we'll see how that goes, but I'm not bullish. Alrighty, stocks and gold. So this is not a usual topic for me, uh, but I thought, what the heck, while we're on— while we're having fun and while we're, we're just, uh, looking at things. I've actually been a professional stock investor and made a lot of money in the gold market over the last, you know, 3, 4 decades. But I thought, let's let's take a gander. Well, so the S&P 500 has had one of the best runs in history. 2023, 2024, and 2025. '24, '23, 16%, over 85% compounded growth over 3 years. So that is actually not unprecedented. So that has happened 4 times before, that or better, in the last 100 years. Do you want to know what happened after that? You want to know what, what, what happened? Let's take an actual look here at those 4 times. So 1949 to 1956. So on the left, you can see the 3 years leading up to year 0, and you can see this massive growth, this 80, 80-plus percent growth. Over 3 years, and then what happened in the subsequent year starting at year 0 going to year 1. All right, so '49 to '56, it's the line on top, the green line, uh, the dark green line. And you can see it continued up one more year, went sideways, and then accelerated for 3 more years. So if you think we're in the '50s, there we are. Um, 1943 to 1950, this is the post-war boom. So the market stalled for 3 years after, after a big run like that, and then started taking off again. The green line at the bottom, 1933-1940, this is post-Great Depression. So you see the market accelerated one more year and then went down, decline, very sad. And I think which is the most like the season we are in right now, and that is the dot-com era, that is 1995 to 2002. So year zero, 3 years of run, it had another 2 years of pretty dramatic increases. And then began to slide and slid thereafter, pretty much. So there you go. There's what happened the last 3 times, or the last 4 times in 100 years where we had this level of returns. So this chart, I love this chart. It's very instructive. And as we know right now, the stock market has hit dramatic highs. Of course, it's come off recently, But, uh, there's this thing called P/E ratio, price-to-earnings ratio, and this is the price of the stock relative to the earnings of the stocks. Okay. And it makes sense that if companies earn more, they should be priced more, right? If, if you have a lemonade stand that earns $1,000 a year, it's worth X. If you can make 3 times that or 4 times that, it should be worth 3 or 4 times that. Well, so what is the price-to-earnings ratio? What are you paying if the price goes, you know, if the the price-earnings ratio is higher, it's the price you're paying for a dollar of earnings. All right. And if the price is higher, if you're paying more for stocks, it makes sense that you're going to make lower returns going forward. So if you pay— if I have a lemonade stand, makes $1,000 a year, and you pay $100,000 for that, you're probably not going to make a lot of money over the next, you know, 10 years in my lemonade stand. On the other hand, if you pay a dollar for that, you've got a good chance of making money. And that's the point here. So what this shows, what this chart shows, is historically the forward, the projected price-to-earnings ratio at any point in time, and then the subsequent 10-year annualized returns. So given the price of the stock market, what are the future annualized returns in percentage? Are you going to make, you know, 10%, 20%? So you see 15%, 20% returns on the left when the P/E ratio is high, like You know, sorry, low, like, like, like, like, like 10 to 12, meaning the stocks are priced low. So obviously, the lower price the stocks, the higher the next returns. The higher price the stocks, the lower the next 10-year returns. All right, there's our, there's our scatterplot. Where are we today? Well, today at this PE ratio, a forward PE ratio about 22 would predict that we have slightly less than zero earnings growth for the next 10 years. So yeah, I'm not super bullish on the stock market right now, as you might guess. Personally, I'm out. And, and so I, you know, I think it's fine if you want to, you want to play that game, but I think the, the earnings are likely to not be stellar, although it may be, you know, a couple more years like the dot-com era, or maybe more, more, 4 more years or whatever, like, you know, the 1950s. We'll see. How about the gold market? Wow. So the gold market is one that, again, I have made a lot of money on over the years. And, um, you may, you may think the gold market is unprecedented, right? This rise that we've had up to, you know, $5,000 an ounce. And it's actually not as well. It's happened 2 other times in history, this kind of returns. So I want to show you what happened January 1980. So from the '70s to the '80s, gold had a blow-off top. And then what happened over the next 19 years after that top? It basically dropped for 19 years and dropped, hit 3 new lows over a period of 19 years. A grinding, horrible, devastating loss for the, for the gold bulls. Well, then in September of '11, um, it had another run-up, and again, we saw dramatic blow-off top in September of 2011. Over 5 years, hit 5 new lows and dropped 45%. So the gold market and this— and the silver market is something I know quite a bit about. Have again been a very successful gold and star and silver trader for years. The problem with the gold market and the silver market is Unlike other investments, there's, there's no earnings on gold. It doesn't pay you anything. If I buy an apartment complex, people pay rent, I make money. So investments pay you back in cash flow over time, cash flow and appreciation, and gold doesn't have that. In fact, it has a negative earnings, and so does silver. Not only that, there's a lot of structural problems in the gold and silver market. For instance, you have the yen carry trade and producer forward selling. I'm not going to get all technical, but it creates a lot of of supply in the market. So bottom line is, is, um, you know, don't put all your eggs in the gold and silver basket. There you got it. $1,000 invested in gold in January 1st, 1980 would give you $7,000 today. Invested in the S&P 500, $190,000. Gold has been a lousy investment over the long haul. For a period of time, it can be good. And if you want to trade the swings, and for the longer haul, if you invested $1,000, you would have $200,000.2 million over 100 years, 98 years, and $11.5 million in S&P 500. Again, make a good choice. All right, we're gonna head now into the kind of the economics. And the other thing, uh, you know, that the thing that is, that is really hitting me, and having lived through the dot-com era, um, how impactful that era was. And I believe AI is the next version of that. So, you know, I was joking with, with Ellis here sitting next to me a minute ago, and, you know, do you remember life prior to the internet? This was only 25 20, you know, 26, 27 years ago. Do you remember using the Yellow Pages? Do you remember, you know, trading stocks? You would actually have to call someone on the phone, and there was a whole ecosystem around customer service and all these things. And today this is all automated. It's self-service. It's all through the internet. The internet absolutely changed everything. And at the time, there's a lot of very apocalyptic kind of predictions for what would happen, you know, relative to the internet, that it was going to destroy jobs and, you know, and all this. And you see the same kind of hysteria happening around AI. And it is a very slow but very massive, massive trend. And I want to give you my take of what I think is going to happen and what it's going to look like. Now, this chart, this chart tells all. This chart tells all. So this goes back to 1940 up to 2025, and the blue line there shows labor productivity. This is output per hour, output per hour in, in dollars, and you can see it accelerating, right? And then what happens, it's, it's plotted against employees, so this is employment, and look when these things diverge. Look at what year is that? That's 2000. That is when the internet really started to pick up mainstream usage. And so what happens is you're seeing, you're seeing technology-enabled productivity to accelerate, but employment didn't need to accelerate because it didn't need a human to create GDP growth or economic activity, economic growth. So here's what I see happening. I see this chart continuing on for another 2 or 3 decades the same because of the same dynamics. So we're going to see employment continue to be, to be modest, but productivity continue to accelerate. So I think this is Internet Part 2. And we're going to continue to see productivity accelerate. And it's a very long, long acceleration. The internet adoption curve, it took a long time. It took, you know, 10, 15, 20 years for the internet to change the way people did things. And we're going to see this same thing happen with AI. Now, I want to show you, this is historical productivity. This is from the Bureau of Labor Statistics. So Historically, look what happened in the years 1990 to 2001. That is, that is the, the early internet boom. And then what happened in the post-dot-com boom? This is productivity growth. 2.8% means, means, means that the average person produced 2.8% more per year in productivity, means economic growth and activity. That is an insane number. And it's a cheat. It's a cheat on, on the system, right? So, so the, the idea is that, is that, um, that human beings, right, you're creating activity, right? So, so population roughly times productivity equals GDP, right? GDP equals population, your number of people, times how productive they are. And so you can either grow your economy by growing your people Or you can grow your economy by growing your productivity. And so this is a cheat code. It's enabling us to grow our economy without a proportional number of humans behind it because technology is fueling massive productivity. So here's my view, is that AI will fuel the next decades of productivity and GDP growth. What it means is we've got this cushion of growth behind us really for the next multiple decades, all because of this AI technology. So it means accelerated GDP for the next few years, more than it would be without this. Um, this is a super interesting chart. So a couple of our economists pointed out the ADP, uh, change in employment, the ADP employment stats. And ADP is a payroll company, so they measure employment right? And they're the largest payroll processing company. So they measure employment and they do it by actual checks being written, right? They know how much people are actually being paid. You know which industries they are. They know how many employees are being hired, fired, etc., as opposed to the BLS data, which is all survey-based and model-based. So this is actual data. And what's happening is we've seen in the last couple of years and really recently last year, we've seen the BLS data materially diverge from ADP data. Well, and the BLS data is not that current. So I'm going to show you what has happened since the ChatGPT launch. Okay. In November of 2023, the change in jobs according to people that actually print paychecks and the number one, number one change in employment is construction. Number 2, leisure hospitality. Number 3, education and health. So, you're seeing these jobs that cannot be AI'd. You're seeing a huge shortage in these jobs and a huge demand for these kinds of jobs. And we're seeing these jobs are undersupplied. We're seeing the kind of the blue-collar market being just, there's not enough workers. And that's being exacerbated by the current administration's immigration policies, which I definitely support a bipartisan immigration reform. We need foreign workers and we need good foreign workers. We don't need bad ones. And I just hope that our policymakers can get together and do what's good for America and help us get workers in here to, you know, for the sake of the country. Meanwhile, look at the white-collar jobs. Information technology, professional and business services are flat and down. So we're seeing this, this K-curve that some of our other economists have called out between white-collar and blue-collar workers. So I do think we're going to see continued challenges, and Belinda Roman called that out. In the employment space and softening employment as a lot of these— as AI displaces workers, and those workers need to find other jobs. Again, it's not catastrophic. It's not instantaneous. It's just there needs to be a retraining, repositioning of people to go where the jobs are and away from where they aren't. All right. Jumping into the key economic drivers that I look at, some of these will be new, but I'm going to make a, make a few points here. So GDP, we're looking at roughly 3-ish percent growth for, for, for 2025. All in a pretty, pretty incredible— the GDPNow stats show GDP running at +5%, which is the Atlanta Fed's, uh, current kind of looking at economic drivers, what's happening. So pretty strong GDP growth, and surprisingly so. Um, as, as I said, this is the chart. This is the, this is the mother of all charts. This is the, the 800-pound gorilla of GDP. Um, you can, you get 70% of the picture by simply looking at this one chart, consumer spending. Now, this chart goes back to the great financial crisis, 2008, and look what happened since 2009. You've seen consumer spending just, just going, taking a brief pause in 2020 for COVID while everybody stayed home. And then after COVID, people came out of their, you know, dark apartments and opened their doors and windows and got their credit cards out and went freaking shopping. And they have not stopped. Look at the acceleration. It's double the pace and, um, 42% since COVID right now, and it's still accelerating. Until this turns down, I'm sorry, but our economy is going to be strong. Okay, so this is 70% of the economy. So we can talk about other things, but this is the 800-pound gorilla. You want a cheat code on understanding where our economy is going? Pull up this one chart from, from the free Atlanta Fed Fascite Fred. Investors are— individuals are still sitting on record amounts of cash. $5 trillion in cash sitting there again since COVID Everybody cashed up and it's not changed. Consumer savings, as they've pointed out, is, is not as strong as it was pre-COVID, but still positive. Consumer debt is low. Household debt service is low. So it's— nothing is significantly changing in the last year. And this is a— this is also a very important one. Household income is rising despite inflation. Now, this is real median household income in the United States. And what real means is this is adjusted for inflation. So this is income after inflation. So look at it. It's been going up since 2009 and took it— took a little brief dip and is now going up again. So incomes are rising. And this is primarily— this is the wages continue to grow. Grow. And here's a quote from Wolf Richter: Consumers may be in a foul mood, but they are making money and they're spending it, and they're still saving some. And that's, that's, that is just a characterization of our economy. Yeah, people may not like it, they may, they may not feel good, but they are making a lot of money and they're spending it, um, and still saving. So that is, that is the big, big picture of our economy. The wealth effect. This is another thing that I look at. This is do people feel wealthy? This is the net worth of households and nonprofits. And the blue line is the net worth. And you can see it keeps going up. It took a huge jump in 2020. This is because housing prices jumped up. They took a massive jump in 2020 and the stock market also went up. And so we see the stock market. So people have their, their wealth in their houses and in the stock market. And so what's happening is we're seeing the wealth effect, the net worth going up. So, and the bottom line is, if you, if you, uh, if you've got a lot of equity in your house, you've got a big portfolio in your, in your 401, you feel good, you feel safe, you feel like spending. And, uh, there you have it. And what's even more is, is the, is the real net worth, and this is the, the yellow, the orange line here, And this is up 30% since 2019. This is again, real means after inflation. The net, the wealth effect is still up there. So people are better off. And again, this doesn't show, you know, obviously, you know, the different levels of income. This is overall. This is, this is overall core PCE, as we've talked about. This is what the, this is what the the Fed looks at, we're seeing running right around 2.8% as of November. And, and it's so it's, it's above the 2% target that makes the Fed, you know, confident that they've, they've hit it right. It's, it's higher than people want. And I'm going to make a, make a prediction here about, about where it's going to go. So inflation, I look at it very differently than other economists do. Okay, um, uh, there's 3 major inputs, and I pay attention to inflation here because it's the primary driver of interest rates, right? Um, so I pay a lot of attention to inflation, and there's 3 things that are the big things that I look at when looking at inflation, 3 big components. And interestingly enough, only one of them is actually a component of the inflation metrics. Okay, only one. The other two are beneath it. They are, they are, they are the, the bedrock, the foundation of all things. And that is the first two, of course, are wages and energy. You can't do anything without hiring somebody. You can't, you can't grow your economy without hiring somebody. So wages matter. And so wages matter. Uh, the other thing is energy. You can't do anything without energy. So energy is the mother of all commodities. Its price is not a part of the Consumer Price Index, but it underlies everything else. You can't farm, you, you, you can't transport, you can't do anything without expending energy to do it. So energy prices, I pay a lot of attention to. And, and then the final one is shelter. And this is— I love that our economists spent so much energy talking about shelter. That is an inflation component, and it's, it's one of the largest, 30, 33 to 36%. Of the inflation metrics. All right. Putting this all together, putting this all together, wages are running hot and will continue to run hot because there is a labor shortage of qualified labor, especially in these, in these blue-collar, you know, kind of, kind of jobs. We just see not enough workers and wages are going to continue to run hot because there is just a shortage that's going to continue. It's going to continue because of demographics. Oil and energy. Well, we're seeing this mother of all commodities. It's super low right now, and it's going to probably continue low for this year and possibly next year. And according to the numbers, the numbers we're looking at. And so energy is the gift that keeps on giving. Low energy prices create massive amounts of savings across the entire cost spectrum, and it puts more money in people's pockets. They're not spending on gasoline to go shopping. So it's, it's just, that's going to be low, low, low. So shelter, as, as we've seen, is, is 30 to 36%. It's a third of the CPI index and 40% of the core CPI index. It also lags the market data. So what we're seeing is, is low rent growth is going to be starting to hit CPI. And some of our economists already hit on this. But we're going to see that the pressure that shelter is creating on inflation start to come down. And we're going to see, you know, between a 0.2% and 0.36% reduction in inflation over the next 2 years based on just the, the shelter component running that forward into what's happening according to the Zillow metrics. So bottom line is here's, here's 3 inputs: one hot, two cool, But I think we're going to see inflation continue to soften towards the— more towards the 2% number and being trading more in the 2%, the low 2% range. I believe we'll see employment costs. So this is back to, back to that inflation component. We're seeing the employment costs running around 3.6%. So inflation is 2.8%, but the employment cost is inflating at about 3.6%. So employment is just, you know, we're seeing employees just cost more and wages are continuing to rise. All right. So here's my Fastball forecast for 2026. I call it signal versus noise. I like that. You know, there's a lot of noise out there. What is the signals we want to pay attention to? And So I'm just, I'm just going to hit these real fast and then we'll get Ellis back here and Ben as I, as I wrap this up. So my view is that inflation is going to approach 2%. So I see inflation coming down because wages running hot and energy staying low and shelter cooling as plateaued data catches up, you know, because shelter has not been increasing a lot. I believe jobs will surprise to the downside, meaning not good. ADP data is materially diverging from BLS data. We'll continue to see white-collar, blue-collar K-curve divergence. So, so we'll see less demand for white-collar jobs, more demand for blue-collar jobs. So we'll see that continuing to surprise to the downside. So we'll see, um, more, more difficulty on the job front. Which, which creates, you know, more wiggle room for the Fed to lower rates. GDP growth will surprise to the upside. So one of our economists, Belinda, was predicting, you know, 3.9%. I am right up there with her. I think we're going to see high GDP growth. And this is, this is due to one, I do believe, you know, you know, that Trump knows what he's doing as far as economics. And I don't You know, that's not an endorsement of everything he's doing, but economically he knows how to spur growth and he's focused on it. But the bigger, the bigger thing is AI CapEx and productivity growth. So we're going to see a boost. We're going to— we already are seeing a massive boost in investment and spending. As, as Belinda talked about the GDP growth, and we're also going to see productivity growth. These are both long, long trends. We're going to see GDP growth and surprises, upside surprises, probably higher than people predict for the next 10 to 20 years. So again, this, this, this, this is all good news for me. Fed interest rates, and this is where I'm going to diverge from everybody else. So right now the market is expecting, expecting 1 to 2 cuts. So right now rates are 3.5 to 3.75%. Um, the market sees right now between 1 and 2 cuts. These are the 2 middle bars down there. Uh, the, the right one would be 1 cut, the left one would be 2 cuts. So market split, 28% will have 1, 28% will have 2 cuts, and the rest, you know, bell curve. Okay, I think we're likely to see 3 or 4, and this is because in my, my forecast of inflation easing, increasingly easing, and also jobs coming in weaker than expected. So, so if that can— that happens, you are going to see a rotation out of Treasuries. Right now, you know, a Treasury earning 4% risk-free, why would you bother buying an apartment complex at 4%, um, uh, you know, so, you know, that has risk. So, so what happens if as the risk-free money drops in yields, you're going to see a the capital begin to move into riskier assets to go up that yield curve a little bit. So that's what I see. Cap rates 2026. This is from one of the big real estate firms, and we're seeing slight declines in all sectors except office. They're predicting for 2026. So cap rates coming down slightly, not much. So I like where Marcus Millichap was. I like where, you know, he was saying, yeah, not much compression. I agree with that. I think we're going to see cap rates being fairly stable but compressing slightly over the next period of time. Bottom line is, I'm going to say the CRA, the bottom is in for multifamily, industrial, and retail. I see transaction volumes increasing this year. I see the buy box expanding. It's going to help B and C assets as, as people start to realize cash flow matters and you can get some great, great properties with great cash flows. So real estate prices begin rising as cap rates fall and Treasury yields drop. Capital will move off the sidelines to seek yield and real estate prices are likely to improve. So we're going to see NOI NOI increases in all sectors as, and as deliveries drop, as we pointed out. I mean, I mean, they really are very precipitous drop in deliveries happening and concessions burning off. So we're gonna, we're gonna see NOI increases across the board. Again, it's not super dramatic. I think it's the beginning, but it's a good time to begin placing capital and starting to move chips back onto the table. You know, you may, you may be aware, you know, Aspen has been very much on the sideline relative to multifamily. And I think it's time to move our chips back, back into the table and start buying some of these really attractive assets at attractive basis. You can get some incredible cash flowing deals and get growth markets at very attractive basis right now and play for all the with all the trends and recovery that we've been hearing today. So, that's our view. Bottom is in. You heard it here. And we'll see. You know, I did call the bottom of the housing market in 2013, May of 2013, called that to the month. And so, I got lucky and maybe my luck is still running. All right. So, there we go. Go. And that's— that is my presentation for today.

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