A previous advocate of stagflation now shares the reasons behind his shift in perspective and why he no longer predicts an upcoming recession

Wall Street Economist Shifts to Bullish Outlook for 2026

• Torsten Sløk, who was notably pessimistic about the market last year, is now dismissing concerns over stagflation.
• The chief economist at Apollo now anticipates robust economic activity in 2026.
• He attributes his improved forecast to several positive factors expected to drive growth this year.

After spending much of 2025 warning about the possibility of a severe downturn in the US economy, Torsten Sløk is entering 2026 with a more optimistic perspective.

Sløk, Apollo Global Management’s chief economist, now believes the US is likely to sidestep stagflation—a scenario marked by persistent inflation and weak economic expansion.

He has also reduced his estimate for the likelihood of a recession to just 10%, notably lower than the 30% probability currently reflected in market expectations, as he told on Thursday.

“It’s becoming increasingly hard to maintain a bearish stance on the economy,” Sløk remarked. “We’re shifting away from the stagflation fears that dominated earlier this year and moving toward concerns about the economy potentially overheating.”

This marks a significant change for Sløk, who was among the earliest to warn about stagflation and a possible recession last year. Stagflation is often considered one of the most challenging economic situations, as high inflation limits the Federal Reserve’s ability to cut interest rates and stimulate growth.

However, as 2026 approaches, Sløk sees several tailwinds that could accelerate economic growth and alleviate stagflation risks.

He highlighted factors such as increased clarity on tariffs, a weaker US dollar, a surge in investments related to artificial intelligence, and fiscal stimulus from President Donald Trump’s . According to Sløk, this legislation alone could boost GDP by nearly 1% in 2026.

At the start of the year, Sløk noted that the US economy appeared to be in excellent condition heading into 2026, citing recent gains in weekly GDP and same-store retail sales as evidence of strong consumer activity.

Consumer Spending Shows Resilience

Year-over-year increases in weekly same-store retail sales point to continued strength among US consumers.

“The stagflation scenario that concerned us in recent months is starting to fade, and our outlook for 2026 is becoming more positive,” Sløk added.

This more upbeat view is in line with other major Wall Street analysts, who are also forecasting a “run-it-hot” year for the markets. Leading banks such as Bank of America, Morgan Stanley, and Goldman Sachs expect the US to enter a period of strong growth and elevated inflation.

Sløk’s Changing Economic Forecasts

Over the past year, Sløk has repeatedly updated his predictions for the US economy. In late 2024, he saw no chance of a recession in the following 12 months, but later raised his recession odds to 90% as global markets were disrupted by new tariffs.