Goldman Sachs argues U.S. inflation is less entrenched than headline figures suggest: tariffs and AI-related measurement effects lift core goods inflation, while adjusted services and labor-cost measures show less pressure than in other large developed economies.
Goldman did not dispute top-line measures: U.S. PCE inflation remained about 3 percentage points above its pre-pandemic trend, while inflation had returned to its long-run trend in emerging markets and non-U.S. developed economies. Economist Megan Peters attributed a 2.4-point addition to year-over-year core PCE goods inflation to tariffs. Goldman estimates AI-related memory-chip pricing adds about 1 percentage point through the software and accessories category. Peters expects the tariff effect to fade substantially in the second half of 2027 and the measurement effect to ease in 2027.
After adjustments for differences in how countries measure medical and financial services, U.S. non-shelter services inflation was lower than in other large developed markets; unit labor-cost growth was also more contained than abroad. Rent inflation had normalized in the U.S. and emerging markets but remained elevated in other developed economies. Goldman expects the Fed’s next rate cuts in December 2026 and March 2027, with core PCE near 3% through the rest of 2026.
