As the year-end approaches, Goldman Sachs and Citigroup have presented sharply contrasting views on the U.S. economic outlook for 2026 in their annual forecasts. Goldman's team, led by Chief Economist Jan Hatzius, struck an optimistic tone in last week's client report, projecting 2.6% calendar-year GDP growth - the fourth most bullish among 77 institutional forecasts and the top prediction on Wall Street. Citigroup's 2.1% projection aligns with the median market expectation but reflects deeper concerns about underlying weaknesses. The divergence centers on first-half 2026 performance. Goldman anticipates "particularly strong GDP growth" fueled by fading drags from Trump-era tariffs, approximately $100 billion in additional tax rebates from signature fiscal programs, and accommodative financial conditions during Fed rate cuts. Citigroup's Andrew Hollenhorst-led team remains skeptical, estimating smaller tax rebates ($30-50 billion) and questioning whether monetary easing can offset labor market deterioration. The banks disagree fundamentally on employment trends. While Goldman sees policy uncertainty easing, Citi economists note "little evidence" linking 2025's hiring slowdown to trade or policy factors. Weak job creation and wage growth form the core of Citi's caution, with their baseline expecting "persistently subdued hiring leading to slower income growth and sustained consumer spending deceleration." Both institutions anticipate further Fed rate cuts in 2026 - Goldman forecasting 50bps and Citi 75bps, acknowledging potential for additional easing. As Goldman notes, risks "skew decidedly dovish," reflecting shared concerns about downside scenarios. Citi highlights equity market corrections and AI investment reassessments as material risks but identifies unemployment spikes as the paramount threat, noting historical patterns where prolonged job market weakening inevitably leads to significant downturns. Goldman similarly warns that "the primary vulnerability remains fissures in the U.S. labor market," where further softening could reignite severe recession concerns.